The following FAQs concerning informal arrangements will assist you in understanding it as a debt solution alternative. These questions and the responses are based upon Australian Financial Solutions' significant experience in providing people with debt solutions.

• Why is the arrangement referred to as ‘informal’?
• Why would my creditors agree to an informal arrangement?
• Why might an informal arrangement be better for me than other alternatives?
• Are there any risks for me in pursuing an informal arrangement?
• What are the other alternatives to an informal arrangement?
• Is it easy to get my creditors to agree to an informal arrangement?
• What should I do now?

Remember that there are alternatives to bankruptcy. So consider the FAQs then contact us at Australian Financial Solutions to receive our free and confidential advice, and discuss the debt solution that best suits you.

Why is the arrangement referred to as ‘informal’?

The arrangement is referred to as ‘informal' because it involves approaching each individual creditor and seeking to agree a revised basis upon which you will repay your debts.  Australian Financial Solutions can approach creditors on your behalf. 

This revised basis for repayment will not have the backing of Bankruptcy Act which would otherwise be described as a ‘formal' arrangement or process.  The interaction with each individual creditor, if successful, results in a contractual agreement rather than an outcome from a statutory process, thus labelled as 'informal'.

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Why would my creditors agree to an informal arrangement?

Some creditors recognise that you are making a genuine effort to repay the maximum you can afford in a scenario where the costs associated with a formal process will be avoided.  Other creditors' terms or policies may specifically provide for hardship provisions that may allow you some breathing space to get back on top of your commitments.

The key is to give your creditors confidence that you are disclosing all of the relevant information to them in order for them to properly consider your informal arrangement proposal.  Australian Financial Solutions' involvement brings independence to the assessment process which will assist in providing this confidence to your creditors.

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Why might an informal arrangement be better for me than other alternatives?

Often an informal arrangement may involve creditors agreeing to provide further time for you to repay debts, or the freezing of interest charges for a period of time or the acceptance of less than the full amount of the debt.  If agreed with the creditors, this can make it easier for you to meet your everyday commitments in a scenario where the costs associated with the formal process are avoided.  It may also keep your credit rating on a better standing.

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Are there any risks for me in pursuing an informal arrangement?

There are risks in pursuing an informal agreement.  In many cases the agreement may not be binding and should you not strictly comply with the revised terms your previous obligations could be reinstated causing you to be worse off. 

An informal arrangement does not always provide the rigor that say a debt agreement may provide as a debt solution.  An informal arrangement requires approval of 100% of your creditors where as other alternatives like a debt agreement may only require a majority (i.e. >50%) of creditors to approve the proposal in order to bind all creditors.

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What are the other alternatives to an informal arrangement?

There are several alternatives to an informal arrangement that should be explored.  If you contact us at Australian Financial Solutions these can be explained and discussed with you to determine which alternative will provide the best debt solution for you.  They include a debt agreement, Part X agreement, and debt consolidation or refinancing.

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Is it easy to get my creditors to agree to an informal arrangement?

It can sometimes be difficult to get all creditors to agree to an informal arrangement as each creditor may have different views and expectations as to the form and terms that the informal arrangement should take.  Some creditors have rigid internal policies that prevent them from considering certain terms contained in an informal arrangement proposal that they may otherwise be authorised to consider under say a debt agreement proposal.

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What should I do now?

Taking action is the key to regaining control and releasing the pressure.  Contact us now at Australian Financial Solutions and we will help you to find the debt solution you need.

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