Informal Debt Management Plans
“I am on stop with my trade suppliers and I have received a county court summons for unpaid debts, the worry and stress has led to sleepless nights and I lie awake worrying about what to do next and what the future holds for my business".
Debt on the whole is a force for good, it lubricates the wheels of business and many companies, partnerships, sole traders and families across Britain could not survive without relying on debt.
However debt can get out of control. A bad debt can impact on liquidity and leave you short of cash to pay your own bills. A lost customer can cause a temporary cash flow problem, or a legal claim can put strain on current cash flow as can an unexpected bill or expense.
HMRC, banks, credit card lenders and trade suppliers will escalate debt collection by making daily phone calls to chase payment and if you cannot pay, these can be a source of stress and misery. However, a failure to pay the debt can be followed up by more serious recovery action such as a Country Court Summons or a Statutory Demand and Winding Up Petitions or a Bankruptcy Petitions.
What is an Informal Debt Management Plan?
An informal debt management plan is is an arrangement where by you or 4R can negotiate with your creditors a settlement agreement. The settlement agreement provides creditors with a statement of your affairs and net worth and cash flow and provides an outcome statement should you or your business be subject to a liquidation or bankruptcy. It requires an agreement from creditors by consent and as such is more appropriate when total levels of debt can be resolved within a 12 or 24 month time frame.
The agreement normally allows for:
• A discount in the total level of debt repaid of up to 80%
• Either a single cash settlement of all debt
• Or a time to pay arrangement over typically 1 or 2 years
• A better outcome for the you as fees and costs are significantly less than a formal insolvency measure like a Voluntary Arrangement
• A better outcome for your creditors as fees and costs are significantly less than a formal insolvency measure like a Voluntary Arrangement
4R will open up a line of communication with all your creditors to get the situation under control and give them a single point of contact to discuss any concerns. A creditors single biggest reason for taking legal action is a lack of communication with them about the problems you are having repaying their debt. We are independent and can develop a fresh start to the relationship.
4R will then negotiate a time to pay or full and final settlement agreement and draw up a contract to make this time to pay arrangement legally binding for all parties involved.
An informal debt management plan is not a formal Voluntary Arrangement which is regulated by the Insolvency Service and managed by a licensed Insolvency Practitioner who will act as the Supervisor of the Voluntary Arrangement and will manage all payment and distributions to creditors on your behalf. The supervisor is a regulated and licensed insolvency professional and is a trusted source of advice and support. We would always tend to recommend a formal Voluntary Arrangement but where appropriate we have had real success helping clients get clear of debts using Informal Debt Management Plans.
4R will undertake a solvency review and make an assessment of your financial health called a statement of affairs completely free of charge.
We will explain the options available to you that will enable you to get Legally Protected from further recovery action and back in control including seeking a formal Voluntary Arrangement, Creditors Voluntary Liquidation or even in the worse case scenario Debt Orders and Bankruptcy.
Get in touch today and have a chat with one of our friendly experts 0800 0385 140 so we can help set your mind at ease.