Informal Arrangements are quickly becoming one of the most popular forms of debt relief. Whilst there are many different kinds of debt help out there, it’s hard to know which solution is right for you. We’ve previously written about Debt Agreements and if they are a viable solution for you. This week’s blog is looking at Informal Arrangements, what they are and if they are the right solution.
What is an Informal Arrangement?
An informal arrangement is just that, an informal arrangement between you and your creditor to pay back your debts under new terms. A viable source of debt relief, Informal Arrangements are not regulated by a formal contract, therefore it’s important you ensure you continue to make the payments as per the negotiated arrangement.
What can an Informal Arrangement do for me?
Informal Arrangements have the ability to:
- Get an extension on the term of your loan
- Reduce your repayments
- Reduce the interest on your debts
- Stop repayments altogether for a period of time
- Permanently reduce the amount of debt you owe overall
We’ve previously gone into more detail about Informal Arrangements here.
Is it right for me?
An Informal Arrangement is ideal if you need debt relief, but you are after a solution which doesn’t affect your credit score, or you don’t meet the eligibility criteria for a Debt Agreement.
What should I know?
It’s important to note an Informal Arrangement doesn’t have a guaranteed result – any company that offers this or tells you on the phone they will have all interest frozen is lying.
An Informal Arrangement is a series of negotiation, a negotiation on each and every debt you have, and as such it does benefit to have a debt negotiation expert on your side, ensuring you are getting the best result possible.
Your creditors at any stage may cancel your Informal Arrangement if you do not meet the conditions outlined in the agreement e.g. You miss a payment. It’s therefore vitally important you continue to make all payments. If you are going to miss a payment, you would contact your Case Manager who would be able to negotiate with the creditor so this doesn’t affect your arrangement.
The other thing with Informal Arrangements, is unlike a Debt Agreement where they last for 5 years, your Informal Arrangement won’t have a solid end date. Depending on the creditor, your negotiation may only last 3 months or 12 months. It is incredibly uncommon for a creditor to accept a negotiated term greater than 12 months. This is why it’s important to have an expert of your team, they can have constant touch points with your creditor and can seamlessly negotiate a new deal.
Where to now?
If you need help with debt relief, and getting your debt under control, give a professional debt negotiation company a call. Here at Debt Cutter we help thousands of Australian’s get their debt under control, give us a call today on 1300 887 211.