By Ellen Ferris, a Solicitor in Matthews Folbigg’s Insolvency, Restructuring and Debt Recovery Group.
Before commencing potentially costly court proceedings, there are a number of debt recovery options which should be canvassed by a wise creditor. One such option is that of a payment plan, or payment arrangement.
The benefits of a payment plan include;
- Regular payments from the debtor assisting with cashflow;
- Debtors are more likely to be able to repay a debt when it is broken down into smaller repayments;
- Potentially keeping relationships with valued customers;
- Opens up a channel of communication with the debtor;
- Avoiding disputes over the amounts owing.
A payment plan can take the form of an informal arrangement, or even just simply letting the debtor pay the debt off in smaller amounts without objecting or suing for the balance. On the other hand the terms may be set out in a formal deed. There are advantages and disadvantages to both approaches, and much will depend upon which of the benefits set out above are most attractive to the creditor. [...]
