If you have unsecured debts of at least £5,000 and have the ability to pay a lump sum to your creditors, perhaps through the sale of something of value, remortgaging your home or a donation from a friend or family, a full and final settlement could be the solution for you.
Depending on how much money you have access to, a full and final settlement involves offering to pay a proportion of what you owe to your creditors in one lump sum payment in return for having the rest of the debt written off.
If your creditors agree to the offer, you will make a one-off partial payment to your creditors in exchange for the full settlement of the debt.
Benefits
- A full and final settlement allows you to pay a lump sum that is less than the full balance you owe and in return, your creditor agrees to write off the rest of the debt
- You could clear all your debts with a lump sum payment of as little as 60% of your total unsecured debt
- Your creditors will be contacted on your behalf
Things you need to know
- There is no guarantee the offer of a full and final settlement will be accepted by your creditors
- Creditors will only accept a reduced payment where it is demonstrated that you can no longer keep up with your contractual payments and the amount offered to the creditors is the maximum amount you can afford to pay
- The exact amount of the reduced settlement will be dependent on the creditor, the type of debt and your individual circumstances
- Any defaults or previous county court judgements will remain on your credit file for six years
For more information on full and final settlements, read our questions and answers.