Practical advice before approve the debtor's payment plan proposal

Proposing a Payment Plan for some debtors could be a very efficient "salvific" tool for helping both parties the Credit Manager to collect a bad debt, as well as the debtor to afford to repay their debts in installments with no stress and pressure on their businesses.

Based on my debt collection experience some debtors ask for a payment plan not because they are having difficulties with the cash, but just to delay payment, or even try to cheat the collector about their current financial situation.

To avoid this kind of situation a payment plan request needs to specify a few important criteria. So before accepting the debtor’s payment plan proposal is advisable to ensure that:

? Amount to be paid – does this include the interest where applicable or any other charges??

? Date of the first payment and last payment.

? Duration of payments.

? Justification for asking for the payment plan (a reason why the debtor cannot pay in full immediately).

? Evidence that the debtor truly needs the payment plan.