What is a Full and Final Settlement?
When your circumstances are unlikely to improve in the future, creditors may be prepared to accept a lump sum payment in full and final settlement of your debts. The payment is often put forward by friends or relatives on your behalf and the sum offered is less than the total amount owed. If creditors accept your offer they agree to write off the balance of your debt.
Can I offer a Full and Final Settlement?
Final settlements are normally only accepted by creditors when they consider there is little prospect of achieving a greater return through either a scheduled repayment plan or Bankruptcy. Therefore, this is only appropriate if you have no assets and no income by which you can make monthly contributions to creditors.
If you believe you may be eligible for a full & final settlement, then contact us here.
Many people find full and final settlements are not applicable to their position and as such there are other options available to individuals such as Individual Voluntary Arrangements (IVA) or Bankruptcy proceedings.
What are the benefits of a Full and Final Settlement?
- You potentially avoid Bankruptcy
- Creditors agree to write off part of your debt
- After settlement, creditors stop ringing and writing to you
Are there any disadvantages of a Full and Final Settlement?
- Negotiations can take some time
- Creditors may continue legal action as there is no court protection (unlike an Individual Voluntary Arrangement)
- Payment normally has to be made within 14 days of acceptance