informal arrangements
You may find yourself in a position where there are only one or two debts that you find difficult to pay and are therefore of considerable concern. These creditors could be approached by yourself quite independent of any formal administrator. In these circumstances, you will normally be asked by them to provide as much information as possible concerning your assets and liabilities and an outline of how you would propose to deal with either part or all of their debts. In such circumstances, a statement as to your income and expenditure will normally be requested by the creditors so they can in turn obtain a better understanding as to your financial position.
The concept behind an informal arrangement is to avoid committing an Act of Bankruptcy. It also avoids any unnecessary legal costs and shows creditors that you wish to deal with them on an honest and up-front basis.
There is however the significant risk that a creditor who does not agree to your informal arrangement will institute bankruptcy proceedings. This would naturally jeopardise your arrangement with all other creditors.
We suggest that informal arrangements should only be considered where there are very few creditors. Professional advice on informal arrangements should be obtained as it is possible to draft a Deed of Agreement which creditors sign. Such Deeds are relatively inexpensive and would bind creditors and yourself to the arrangement.