In some cases, you may be fortunate enough to pay a lump sum to your creditors as a result of using a windfall or savings to reduce your debts. This process can mean that you are able to negotiate with creditors and agree a lump sum that will be accepted instead of the amount you owe to them. This is known as a ‘full and final settlement’. If you do manage to convince creditors to do this, you should be sure that they are prepared to write-off any outstanding debt in return for your lump-sum payment.
In most cases the reason for this is that there is a friend or relative who has offered to give you money to help you pay off creditors. In this instance it is very important to outline to creditors that the money would only be available to you on the basis of completely writing off your debts.
If your creditors are agreeable to this arrangement, you should ask for a written confirmation that they accept your payment and that they are prepared to write-off any additional debt. You should also ask that reference to the debt is amended on your credit file so that it will not affect your financial status in the future. The account should be stated to be closed and the balance should be zero.
If you are thinking of using a full and final payment to settle your debts, it would be worth running through your situation with one of our debt advisors to check this is the best debt resolution for you.
Call us now for immediate and confidential free debt advice on 0808 208 5198 or complete the form. We can start to work through your debt problems as soon as you contact us.
- Gives you a chance of a clean break
- Useful solution if you come into a lump sum such as via inheritance
- Creditors may not accept
- You will need to build up a substantial amount in relation to your debts to offer