Full & Final settlement

Lump sum settlements

This means that you ask each of your creditors to let you pay a lump sum instead of the full balance you owe on the debt.

Your offer should be a pro rata offer, that is the larger the debt, the more of the lump sum they get.

In return for having a lump-sum payment, the creditor agrees to write off the rest of the debt.

You may be able to do this because you have come into some money or have some savings you can use.

Sometimes a friend or relative offers to put forward a lump sum to help you pay off the creditors. Your circumstances may be very unlikely to change for the better in the future.

It is very important that you explain to the creditors that the money will not be available forever and the friend or relative will not make the payments unless the offer is accepted.

Full and Final settlement in writing

Make sure the creditor agrees in writing to change your credit reference file details to show that the balance has been paid and the date this happened.

Check this has been done by asking the credit reference agencies for a copy of your credit file.

  • You can expect to see your account showing as having been closed.
  • Your balance should change to ‘zero’ to show that there is no more money due.
  • Credit reference agencies will mark the account with a ‘P flag’ for ‘partial settlement’ which means that you have made a part-payment and not paid the balance in full.

The Debt Counsellors can assist you with negotiating a lump sum full and final settlement with your creditors.

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