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Informal Agreement with Creditors FAQs

An Informal Agreement with Creditors is very different from some of the other debt solutions available. If you’re considering this as an option for you, take a look at our most frequently asked questions to understand the ins and outs before coming to a decision. If you feel as though you still have queries or concerns, don’t hesitate to contact us today.

An informal agreement made with a creditor is an agreement between both parties that is not bound by legislation or formalised by a contract.

In an informal agreement, you contact your creditors and ask them to agree to accept regular lower repayments towards what you owe them. It is possible to negotiate an arrangement with your creditors that will reduce your debt level or make a mutually beneficial repayment plan.

As the agreement is not legally binding, your creditors do not have to accept your informal agreement request. They can also cancel it at any time. Your creditors can also still contact you and take court action such as applying for a Charging Order over your property which may put your property and assets at risk.

There is no cost associated with setting up an informal agreement, but small repayments may not cover any interest or charges. If this happens, the amount of debt you have to repay and the time it takes to pay it off can often increase.

You can set up an informal agreement yourself, but you should make sure that it is the right way to deal with your debts. To do this, get free help and advice from organisations like Citizens Advice or AdviceNI.

Setting up an informal agreement yourself involves firstly, working out a budget to show how much you can afford to pay your creditors each month after all your essential living costs have been accounted for. The second step is to write your informal agreement, outlining how much you can reasonably afford to pay and over what time frame. The third step is then to write to your creditors, explaining your situation and asking them to accept your informal agreement.

You will need to do all of this yourself. If you have multiple creditors, you will need to contact them all individually.

As you will be responsible for making the arrangements and administering all of the payments yourself to each of your creditors, you will not have to pay any third-party management fees or court costs. You can also re-negotiate your agreement at any time.