Informal Debt Deal:

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You have decided to that you want to avoid any formal insolvency such as bankruptcy or individual voluntary arrangement.

You want to reorganise your debts over a longer period of time and or want to have the debts repaid at a lower level. But you do not have debt or insolvency experience or do not have the time or desire to restructure your debts.

If you wish to avoid formal tools like bankruptcy for a variety of reasons (check your objectives pages first) it may be possible to negotiate a deal with your creditors to reorganise the debts over a longer period of time, or even to reduce your debts and stop interest. This will be a complicated and time consuming process but can be powerful.

Before deciding on this mechanism please read this guide

• Establish if you are insolvent by drawing up a list of ALL creditors and assets (or statement of affairs)
  
• Consider your objectives
  
• Read all other options guides on this website
  
• Decide to ACT!

Debtless can assist with informal debt deals. We will need to have ALL information on the debt and asset position to assist you to build a Statement of Affairs (SOFA). And we will want to be convinced of the reasons for using this mechanism above others.

We have lots of experience in doing deals with creditors going back over 10 years and many thousands of creditors, but there is no guarantee that this approach will work.

"Informal" deal:

Merely calling and or writing to the creditors, explaining the position: and that you want to pay them back in full as fast as possible but you cannot afford to, can work wonders. BUT do not do this without a planned approach. You must:

1. Work out your income and receipts statement cashflow - be realistic.
   
2. Not over promise. If it looks like you can pay all of your creditors in 12 months ask for 18!
   
3. Not break deals. But if it is unavoidable, write and call the creditors and explain carefully where the plan has not worked.

"Formal" deal:

This is not a formal insolvency deal such as an IVA. But the use of a professional turnaround practitioner can ensure that the "honest broker" effect achieves a workable deal. Once again the deal broker will want to see evidence that the debtors is seriously trying to resolve the problems.

Some creditors may even accept write-downs of debt if they think the debtor cannot afford all of the debt repayment.

If you want to be introduced to such a service please call us on 0800 195 6762.

Tips

• Don't wait until legal actions have been taken against you to ask for a deal.
  
• Keep a log of all calls and letters to creditors - that way you can check back.
  
• Ask for the name of the people that you speak to.
  
• Have a review every month - if you are falling behind take action.
  
• If the plan is clearly not working consider the other options on this site.
  
• Don't wait too long to get professional help. Often an IVA can remove the stress and allow you to get back to work, not the deals with creditors.
  

Summary of advantages and disadvantages of an informal debt deal

Advantages

• There is no bankruptcy stigma
  
• Avoids bankruptcy or IVA
  
• Can stay as director or partner in partnership
  
• No employment restrictions
  
• No publicity - discrete
  
• Using an advisor like Debtless demonstrates to creditors you are serious
  
• Cost effective if done quickly
  

Disadvantages

• You cannot force creditors to accept the deal
  
• It may take longer than an individual voluntary arrangement (IVA)
  
• It may be more costly than an IVA
  
• IT IS NOT LEGALLY BINDING
  
• You credit rating WILL suffer
  
• Cannot get rid of fines or CSA payments
  
• If you miss future payments - the deal can be torn up - debt problems all over again
  

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