When someone is in debt, it is usually to more than one creditor. While it may not always be the case, usually when in debt it is to multiple creditors, and multiple accounts.

Some of these accounts, like a bank overdraft, or a first credit card, seem to have some sentimental value to us. It could be that we have had the account for so many years, or the debt may be attached to the bank we have our banking accounts with.

When we are struggling to repay our debts, or in the instance of being insolvent and seeking outside help, either via the courts such as with Bankruptcy, an IVA or a Debt Relief Order/DRO, the issue of what creditors we have and how they get paid is taken out of our hands.

This issue of who gets paid and how much is handled by the Official Receiver in Bankruptcy, and a DRO, and the Insolvency Practitioner aids in this with an IVA.

Also in most Debt Management Plans, the payments to each creditor can be determined by how much we can afford to pay, and the percentage of debt we owe to each creditor.

In all of these debt options, it falls out of our hands as to if we wish to favour a creditor, which in this context is to pay more towards that account, or even continue to pay the usual monthly payments to one creditor, while slighting or paying less to other accounts we owe.

If you are not in a formal or informal repayment plan, you can favour one creditor over another, however, your other creditors may not like this, and in some instances they may not work with you in accepting reduced payments during the period you may be financially struggling.

In formal debt arrangements, as stated, the payment amounts are out of your hands. Of course you could pay extra to a creditor outside the plan, but that is going against what the purpose of the debt plan is all about. In addition, in Bankruptcy and IVA’s, your income and expenses are looked at closely, and in an IVA, monitored on a regular basis. You would not have the extra funds to favour one creditor over another.

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