Negotiation by Professionals
Individual negotiation with creditors is an alternative to formal insolvency where the debtor wishes to avoid bankruptcy or an Individual Voluntary Arrangement.
You may quite reasonably wish to avoid entering into any formal court based arrangement with creditors. You may prefer to individually negotiate with creditors to agree a mutually agreed way forward.
In practice, it can be that individual negotiations only work if you have three creditors or less. Should there be more than three creditors, you may find that it is more difficult to reach a satisfactory agreement with them as each creditor is likely to want something different and a disproportionate share of your income or assets..
You firstly have to determine your negotiating position. For example are you going to offer:
1. A full and final settlement out of your own assets of so many pence in the pound or
2. Reduced monthly payments or
3. Creditors a proposal on the basis that an offer of a lump sum is made by a third party.(such as your parents)
4. It may be that you are in a position to raise a lump sum (for example by way of re-mortgage) to repay your creditors by way of a full and final settlement offer. If agreed this does not mean that you have to repay your creditors in full, it could be that you offer your creditors 50% or some other percentage of the total value of the debt if your assets only extend that far. (Creditors cannot have that which you do not have!)
A letter would be sent to each creditor informing them of the situation that you find yourself in and giving them full details of the offer that you are making. That letter must be comprehensive as the creditor must understand why you are making a reduced offer. Creditors would require in that letter details of your assets and liabilities and income and expenditure.
It is most important that everything is agreed in writing in order that there is proof of the agreement made - no confusion can then arise later.
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