Informal Debt Settlement

If you’re wondering how to get out of debt, an informal debt settlement is one of the first options you should consider. An informal debt settlement helps you negotiate the terms of the debt you owe to creditors and possibly reduce your interest rates. Dana MacRae Trustee in Bankruptcy has extensive experience in aiding individuals and businesses with an informal debt settlement program and the debt counselling they need to stay out of debt. Here is how we can help and what you should know about informal debt settlements.

What Is An Informal Debt Settlement?

An informal debt settlement is an agreement with your creditors to pay back your debt, usually under more favorable conditions than you previously experienced.

Under an informal debt settlement plan, you may ultimately pay much less to settle your debts through lower interest rates or reduced debt levels. In addition, an informal debt settlement plan can help you with debt consolidation, helping you put all of your various debts into one loan and make one monthly payment. An informal debt settlement is an important alternative to bankruptcy, and is often worth exploring before taking more drastic actions.

How a Trustee Can Help

An informal debt settlement often means speaking with each individual creditor separately. They want to see a plan you put forward to pay back the debt. Each creditor will likely offer different timelines for paying off your debt. They will also propose different interest rates, payment scheduling and total debt owed. Longer payment schedules often result in higher interest rates. All of these various factors in the negotiation process means you might have your hands full presenting a plan that satisfies the needs of all your creditors.

A Dana MacRae bankruptcy trustee can help you review your budget, assets, income, and debts owed to formulate realistic terms for an agreement with your creditors. Your trustee can also directly contact your creditors for you, acting an intermediary working to secure terms that work for both you and your creditors.

What You Should Know About an Informal Debt Settlement

An informal debt settlement is different from a formal one, which is referred to as a consumer proposal. A consumer proposal has more legal power, is binding, and sometimes offer more debt relief. However, an informal debt settlement will have less of a negative impact on your credit rating.

Creditors ultimately are under no obligation to agree to your informal debt settlement proposals. In fact, your informal debt settlement is non-binding, which means your creditors can cancel it anytime unless you created a binding legal document that all parties sign.

Ultimately, it’s important you have a trustee that can inform you of the pros and cons of pursuing an informal debt settlement. If you’re wondering how to get out of debt, this kind of debt counselling is necessary to make the first steps towards financial freedom.

If you’re interested in credit counseling solution that works for you, call Dana MacRae today at 1-800-665-9965 for a free consultation.