Paying off your financial obligation through a debt arrangement plan can benefit you in many ways. For a start, it will stop the annoying calls from the collection agents. It will remove every outstanding burden on your credit card and improve your chance of getting approved for new loans and offers.
The problem is that some loans can be too large to pay off at once as it can have a significant detriment to your monthly budget. One option is to negotiate a debt arrangement plan with the debt collector that makes it easy to organize your debt repayment.
Requirements for Debt Arrangement
Source: Debt.com
Debt arrangement is an informal debt repayment plan, like an IVAWizard.net. It allows you to negotiate an amount to be repaid to your creditor each month.
Unlike IVA’s, there is no minimum or maximum level of debt that you must have before you can negotiate the arrangement.
The option is most suitable for credit card payments. However, you can also use it to negotiate other kinds of short-term loans such as retail credit accounts and even tax payments.
There is usually no set limit to the duration of arrangement period and it is usually from one year to five years. You can work together with your creditors to assess a reasonable period of time for the debt arrangement plan based on the total debt and your income level.
How to Set Up the Debt Arrangement Plan
Source: Debt Advisory Services (Scotland)
The first step to setting up the arrangement is to calculate your disposable income after payment of essential outgoings. Next, you should calculate the total amount you owe and apportion the amount you can actually pay between different creditors.
You should also consider the interest charge on each outstanding credit balance. Some credit lines will charge you a higher interest rate and these should be settled on a priority basis as they cost you more.
Once you have outlined your payment plan, you can approach your creditors and try to negotiate the debt payment arrangement. Although creditors are not legally obliged to agree to it, they must treat you fairly. If you are facing financial difficulties, they would consider the arrangement plan and freeze your interest charges.
Benefits of the Debt Arrangement Plan
Source: SoFi
- Although it is not a legally binding debt payment plan, an arrangement with creditors is still recognized by courts and many creditors accept it.
- It is a fair and transparent system and you are made aware of the full costs in advance. There are no hidden charges.
- The interest charges are stopped by the creditor, reducing your total payout.
- You can alter and renegotiate the plan if your circumstances change and you are able to repay the amount due in full.
- You can hire an experienced debt advisory and negotiating agency to work on your behalf.
- It gives you time to settle your loans if you are struggling financially.
