One of the options in dealing with a debt crisis is an informal arrangement. This is essentially reorganizing the debts that you have with the creditors you owe the money to.

We’re not talking here about a consolidation loan. That’s different because you end up with only one creditor if can consolidate your debts. An informal arrangement involves renegotiating the debts you have with the creditors themselves. You still end up with the same creditors, but your payment obligations have been reduced. For instance, you could extend a term on a loan or change a credit card debt into a loan.

The challenge is, to make this work you pretty well need all your creditors to agree to new terms. Even if only one creditor refuses to budge it might make it impossible for you to meet the new terms you work out with the others. Without everyone onside, your reorganization probably won’t work.

The other problem with this option is the difficulty of getting to even talk with the right person at the other end. Many creditors,  especially credit card companies, make it very difficult to get past the customer service person, who is not usually empowered to make  new arrangements with cardholders. You would have to speak to someone higher up the ladder and that can be tough – not impossible, but tough.

Sometimes an agency or a lawyer can negotiate an informal arrangement for you. There are agencies that specialize in this kind of thing. But they are constrained by the amount of money you owe. You have to be able to supply minimum monthly payments for them to be able to be effective for you. And you may not be able to afford this. At this point, it would be wise to consult a Licensed Insolvency Trustee, like Richard Killen & Associates, to discuss what your other options are, such as a consumer proposal or bankruptcy.