We always recommend that you should first approach your creditors and ask that your debts be rescheduled, in other words you ask for an affordable repayment plan.
The benefit of an informal arrangement is that you may be able to keep your credit rating in tact if you stick to your agreed repayment plan. It is critical that you honor your commitment if you can agree a repayment plan. If you are not able to honor your commitment your creditors may lose patience and collect the debt through the court system which may lead to your bankruptcy or the sheriff repossessing your property
An informal arrangement is more likely to be successful if you only have a small number of creditors (like 1 or 2 creditors). If you have more than 2 creditors it may be different to reach agreement with each creditor. Notwithstanding you may reach agreement your creditors may be entitled to demand full repayment at some later stage.
Debt Consolidation Get the Facts
4/06/10