Informally negotiated arrangement

Key facts

How much debt must I owe? ​There is no minimum or maximum level of debt.

What type of debt? Use this option for credit debts only, after you have dealt with priority debts.

How long will it last? There is no time limit. You may be paying for many years.

How it works

Normally, you work out your offers of payment based on a pro-rata distribution of your available income, after you have worked out what you have to pay on any priority debts and your essential household outgoings. This means that all your creditors are offered a fair share of what you can afford to pay. You also need to ask that any interest and charges are frozen.

Creditors have to treat you fairly if you are in financial difficulties. They should consider your offer of payment and consider freezing interest and charges if you ask them.

You may need to offer no payments if you have no available income. This is called a ‘moratorium’. You may prefer to make token offers of payment of £1 each month to each creditor. Creditors are only likely to accept this for a short time.


  • Fair and transparent method of distributing payments.
  • Recognised by courts and widely accepted by creditors.
  • You can alter payments if circumstances change. You do not need an advice agency to negotiate these payments for you. Our budget tool Your budget shows you how to draw up your own personal budget and make offers to creditors. You can use sample letters when negotiating with your creditors.
  • Through an advice agency you can use the Standard Financial Statement.


  • Creditors may refuse your offers (although it is always worthwhile asking them to reconsider).
  • Creditors may refuse to freeze interest and the debt will grow. (Again, it is worthwhile asking them to reconsider.)
  • You will have to pay your debts off in full. This may take a long time.
  • Creditors may refuse offers unless made through an advice agency. (You can complain to the Financial Ombudsman Service if this happens.)
  • Creditors may take court action. This is a particular risk if you have larger debts and own your own home, as it may be possible for the creditor to get a charging order on your home.
  • You are responsible for administering all the payments yourself and keeping your creditors up to date with your circumstances.
  • Many creditors will often accept reduced offers for a limited period only and may ask for regular reviews.
  • Your credit rating will be affected.