Get Creditors Off Your Back in 4 Easy Steps

Most people wish they could satisfy the repayment requests of creditors, but simply can’t afford to without neglecting some of their more pertinent expenses. After all, you don’t want a damaged credit score any more than the creditor wants to wait for the money owed to them. If only you could come to a mutually beneficial agreement that would give you the leniency and time needed to recover, while also satisfying the demands of the lender? With the help of this 4 step guide you can:

Step 1 – Determine Which Type of Arrangement You Want To Pursue

First you need to decide what kind of arrangement you want to propose. There are three main types of informal arrangements – individual voluntary arrangements (IVAs), company voluntary arrangements (CVAs), and debt management plans (DMPs). The terms of a DMP are usually designed by the creditor after a request from the debtor, while the terms of an IVA or CVA are proposed by the debtor as an effort to gain compliance from the creditor. To determine which of these arrangements would be most suitable for your situation contact your creditor or a financial advisor and discuss the issue beforehand.

Step 2 – Analyze Your Current Budget and Expenses

You can increase your chances of getting a creditor to agree to an arrangement if you create a spreadsheet that lists your current income and monthly expenses. This will not only give you a realistic idea of how much you can afford to repay each month, it will also show the creditor that you have taken the time to thoroughly review your financial capabilities before suggesting a sustainable course of action.

Step 3 – Consult with an Insolvency Practitioner

If you’ve failed to gain creditor compliance on several occasions, or are not confident in your ability to devise and pitch an arrangement proposal, consider consulting with a licensed Insolvency Practitioner (IP). IPs are trained to assess your situation, analyze your books, and draft a comprehensive IVA or CVA that your creditor will be likely to accept. Creditors know that IPs have a reputation to uphold, and are therefore more willing to consider professionally drafted formal arrangements.

 Step 4 – Adhere to the Arrangement Terms

The final step is the least complicated, yet may be the most difficult if you didn’t closely follow the steps above. Arrangements do not require any court proceedings, and are therefore the ideal option for most people because of the simplicity and flexibility they provide. However, if you violate the terms of the arrangement you could be subject to court proceedings that may result in the liquidation of your assets, depending on the terms and conditions. Allan Keaney is knowledgeable in all facets of personal and corporate finance. He has cooperated with and contributed to some of the most successful financial firms and websites in the UK, including

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