Informal Debt Settlement Questions
How does it work?
How do I qualify?
What if my creditor rejects my proposal or won't negotiate?
Is there a cost involved?
What if I make I cannot keep up with the terms of my proposal?
What do I do if my creditor ended the arrangements before I was finished paying?
How does it work?
Depending on the amount of debt you have it may be possible for you to directly contact your creditors and negotiate a lower interest rate or a repayment schedule that works for you.
With informal proposals, creditors expect you to present them with a plan outlining how you can pay them back. You may also be required to submit a sworn statutory declaration outlining all of your assets, debts and income. Creditors will negotiate with you, as their goal is to obtain the money that is owed to them. Explain your financial situation honestly and submit a realistic proposal with a reasonable payment schedule. Be aware, the longer the repayment term, the more interest you will be paying.
Creditors are not required to nor have any legal obligation to arrange alternative payment terms with you. Furthermore, the creditor can end special arrangements at any time with little to no notification. Also, this option may not stop collections agencies from calling.
How do I qualify?
Whether you qualify completely depends on the creditor you are contacting and the plan you present to them. Important factors such as the length of the repayment term and the amount of debt you have will affect their decision to accept or decline your proposal.
What if my creditor rejects my proposal or won't negotiate?
There are other options for you to resolve your financial issues. These include a formal proposal or bankruptcy. It is always best to talk to a professional to find out which solution is right for you. Visit our debt calculator to see which choice is the best for you or contact an MNP office or your local MNP Trustee for more information.
Is there a cost involved?
There shouldn't be an initial set up cost for an Informal Proposal. The purpose of an Informal Proposal is to lower the interest rate on your payments and potentially extend the payment period. Additional cost results from the accumulated interest charges over a longer repayment period.
What if I make I cannot keep up with the terms of my proposal?
An Informal Proposal should be realistic. If your proposal is out of your financial reach you should consider other options to deal with your debt. Our debt calculator can help you find the appropriate debt solution or contact an MNP Trustee near you for a free confidential consultation.
What do I do if my creditor ended the arrangements before I was finished paying?
It is important to get any arrangement you make with your creditors in writing. While it may not be a legally binding contract, it is a useful document when discussing the termination of your Informal Proposal. If the creditor refuses to reinstate the Informal Proposal, you can file for a Consumer Proposal which is legally binding.
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