What is an Informal Arrangement (IA)?

If you're in debt and experiencing difficulties in paying your creditors, you may wish to enter an Informal Arrangement (IA) with them.

Unlike an IVA, an Informal Arrangement is where you approach creditors yourself to make them fully aware of your financial situation, and to see whether they will accept lower repayments until your circumstances change and you can meet full repayments.

If you want help with this process, you could choose a Debt Management Plan. This is where somebody negotiates on your behalf.

If you want to consider an Informal Arrangement, you need to bear in mind that your creditors may agree to this for a limited period of time, then change their minds. So it may be better to consider an IVA, Debt Management Plan or another type of debt solution.

Informal Arrangements FAQ

When is an Informal Arrangement suitable?

Informal Arrangements are suitable in four different circumstances:

  1. If you have a small number of creditors and are confident in your ability to negotiate with them and maintain reduced payments.
  2. When you are experiencing debt problems but are likely to be able to make the normal repayments again in a few months' time.
  3. When you are over-stretched and can afford a regular amount, for example £50-£100 per month.
  4. An Informal Arrangement can be used to tide you over until your financial situation improves.

What are the advantages of an Informal Arrangement?

The Informal Arrangement is a good idea if your problem is short-term, and can be drawn up by you or an independent debt advice agency quickly. If your debts arose because of a significant and long-lasting change of circumstances, an Informal Arrangement is unlikely to provide an effective long-term solution.

What are the disadvantages of an Informal Arrangement?

Your creditors are under no obligation to accept your offer of reduced payments, and if they do accept, they can change their minds at any time. If they accept, they are likely to do so only for a few months, unless your situation is unlikely to change.

For more information regarding Informal Arrangements, call us now on 0808 163 9579 to speak to an advisor or complete the form below.

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