Full and Final Settlement

A full and final settlement is where a borrower makes an offer of a one-off partial payment to a creditor in exchange of the full settlement of a debt.

A full and final settlement offer can either be informal, or a formal proposal to bring an IVA to an early conclusion. 

We arrange full and final settlements every day and have a dedicated team do to this who are experts at negotiating with creditors in such matters.

In most cases, settlements are offered to creditors for our existing financial management or IVA clients to bring those arrangements to an early conclusion. However we do also arrange for debt settlement offers from new enquiries whether the client be on a debt management plan elsewhere or not.

Benefits of a full and final debt settlement

• Part of your debt written off. If the creditors accept your offer, you will pay less than you would otherwise have to.
• Providing that your creditors agree to your offer, it offers you an immediate chance of a fresh start.
• Creditors should inform Credit Reference Agencies that the balance has been paid off in full.
• Allows you to remortgage in circumstances where there isn't enough equity available to clear your debts in full, but consolidation is required to secure the lending.

When Full & Final settlements are suitable.

Full and final offers are suitable when you have access to funds to make a lump sum payment, but not the means to make continuous contractual payments.

If for example you are on a financial management plan oweing say £15,000 and only paying back £100 per month, your creditors would have to wait over 10 years to get all their money back. Many things could happen in that time resulting in them seeing little of this. Depending on personal circumstances, they may accept half this amount to satisfy the whole debt.

Raising money to make a Full and Final payment offer

Typical sources of capital to make a Full and Final offer include:

• Redundancy payment
• Sales of assets
• Remortgage
• Gift from family or friends
• Inheritance or other windfalls.

What you are not allowed to do is take out a conventional unsecured loan to raise the money.

How Harrington Brooks can help

We work out your total debt and make a pro-rata offer to each creditor depending of the percentage of the total debt owed to them. It has to be this way as we would need to explain to each creditor about all your debts and so that all creditors are treated equally. We would also request that defaults are not recorded against you as not all the debt is being paid back.