PURPOSE
This option could be considered where there may be a specific reason why dealing with an individual’s debts in an informal sense will provide a better result to creditors than if the individual has to consider some formal personal insolvency option, such as voluntary bankruptcy. Certain registrations or licences may be cancelled if a person enters into a formal personal insolvency option, ie bankruptcy.
Informal Agreements are reached outside of the auspices of the Bankruptcy Act. It is critical in such circumstances to get all creditors to agree to such arrangements (or those that the individual expresses a desire to) in order to try and bind the creditors where possible. Whilst reaching these kinds of Agreements can avoid the stigma of a formal personal insolvency option, much care needs to be taken to ensure that it is appropriate for the individual and that the key objectives can be achieved.
BENEFIT
We have worked with many individuals in determining the appropriateness of these kinds of Agreements and assisting them in the negotiating process.