Full & Final Settlement Offers
A full and final settlement agreement is a way of giving an agreed lump sum payment to a creditor against the full balance of a debt. The remaining balance will then be written off.
You may have come into some money, have savings and want to use it to clear your debts or a third party may have offered to clear it for you. You should advise the creditor, when a third party is offering money, and that they will not make the payment until the offer is accepted and that the availability of the money will only be available for a limited time.
Where your situation is such that you have been unable to make regular repayments and your circumstances are unlikely to significantly improve, this is an option to clear your debt if funds allow. You should also explain this to your creditor.
When you communicate to creditors proposing a full and final settlement it is sensible to put it in writing. It is also important to ask the creditor to accept in writing. If there is a dispute later, as to what has been agreed, it is easier to prove if you have it documented. It is essential that you keep a copy in case there is a dispute, which could occur many years later. You should always receive written confirmation and acceptance of your offer before you send a lump-sum payment.
Credit reference files
It is very important, as part of the agreement, when you propose your offer, to request that the creditor marks your credit file as fully satisfied. Otherwise it is possible that you are chased for the remaining balance at a later date. This can cause problems especially if you have not kept a written copy of the acceptance of your agreement.
It is possible, if you are 55 or over to access your pension fund and use your money for debts.
Offers to Creditors
Managing your expectations
Your creditors do not have to accept full and final settlement offers, especially where you hold assets, such as a property with equity, that exceed your debt liability. You could also be left in a position where some creditors accept and others don't, this may mean that you need debt advice and a debt solution.