Why would the people I owe money to (my creditors) accept me proposing a debt agreement to them?
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In order to enter into a debt agreement, an individual must currently be insolvent and not paying their debts because they are unable to. The debtor who meets this requirement can enter into the debt agreement by proposing to pay a certain amount to their creditors on payment plans in lump sums or by knocking off a portion of their debt.
This proposal by the debtor must be submitted to a trustee who is usually a part of a debt management company, who creates and/or examines the proposals and submits them to the creditors. The creditors will then vote on accepting or denying the proposal submitted by the debtor, and this voting occurs in a meeting between the creditors, the trustee, and the debtor.
Because a person who enters into a debt agreement is already not paying their debts, the creditor is not currently receiving any payments on the debt which is owed to them. Under the debt agreement, the debtor will be paying back all or a portion of the debt under the terms of the debtor. While the creditor would rather that they receive all of the debt owed to them, receiving some is better than not receiving any payment from the debtor, such as what would occur in the case of bankruptcy.
Agreeing to the terms of a debt agreement allows the creditor to at least recoup some of the debt owed to them. During the process of a debt agreement, the debtor is expected to uphold the agreements of the proposal. The creditor must also cease the collection of any interest on the debt and must accept the terms of the proposal they agree to. The debt agreement may be the only hope the creditor has in gaining some of the money owed to them back.
Therefore, the reason why creditors accept the terms of debt agreements is to ensure that they are at least recouping some of the funds previously lent to an individual, even if it means losing some money, interest, and being required to do it under the debtor's terms.
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