Informal payment agreement can be arranged by either an individual or a company. They involve speaking to all creditors and coming to an agreement on how the debts will be paid back over a period of time. They tend to be used when the amount owed is low, there are only a few creditors and where the debt can be paid back in full over a short period of time.
Though the procedure is often viewed as attractive as they can be arranged by the individual or company themselves and therefore there is no cost in arranging them, they are not legally binding and creditors are often unwilling to enter discussions about arranging them. As such they are not always a suitable option for all.
When are they suitable?
Because of the nature of informal agreements and the fact that most tend to have a pay back period of not more than two years, they are generally used by those that have short-term cashflow problems and a small number of creditors and who have the confidence and ability to negotiate with their creditors.
The benefits of a formal arrangement
A formal payment arrangement is legally binding and is where the individual or company and their creditors agree how much of the debt is to be paid back and over what timescale. The total amount paid back can be less than the total amount owed if the individual’s or company’s circumstances mean a full payment is not possible. An arrangement for an individual is called an Individual Voluntary Arrangement (IVA) and for a company a Company Voluntary Arrangement (CVA).
Another benefit of a formal arrangement is that the insolvency practitioner firm such as Walsh Taylor carries out all the negotiations, meaning the individual or company does not need to have any contact with their creditors if they do not wish to.
It you would like to see if an IVA or CVA is suitable for you please contact Walsh Taylor, who have assisted many clients with them in the past for a discussion. There are numerous reasons why the Leeds, Harrogate, Bradford and Darlington-based teams at Walsh Taylor can be of huge benefit to you.
For more information or for free, confidential advice, please contact us today by calling 03300 244 660.