How Much Can You Settle a Debt For in Full & Final Settlement
Well, as you can see in this particular case, a debt of £11,160 was eventually settled for £2,812 in a Full and Final Settlement. This works out as a saving of approximately 75%. So as you can see, if you do have the funds available, it is worth fighting for a low settlement figure.
How Easy is it to do a Full and Final Settlement
There are a number of things to consider when doing a full and final settlement.
Firstly, you do need to have access to some funds to make immediate payment should a creditor agree to a full and final settlement?
The age of the debt is also something that needs to be considered. If the debt has only recently gone into default, then a creditor is less inclined to agree a low figure in full and final settlement.
Are monthly payments still being made towards the outstanding balance? I creditor may well be happy to receive a reduced monthly payment towards the debt. However, if a creditor is not receiving monthly payments they are more inclined to accept a full and final offer.
Do you have any assets that the creditor is aware of? If the creditor knows that your are living in your own property and they believe that the property has equity, once again they will be less inclined to accept a very much reduced offer. It may be that if this is the case, the creditor may consider placing a charge over your property via a charging order.
As a final note, full and final settlements are not easy! The creditor will want as much money in settlement as possible and obviously, you will want to offer as little as possible.
Should I Tell a Creditor That I Have Funds for a Full and Final Settlement
Yes, BUT, NEVER tell a creditor that you personally have the funds available for a full and final settlement! If the creditor asks “do you have the funds for a full and final settlement”, say yes and tell them that a third party or family friend will help you out if you and a creditor come to an agreement.
What if My Full & Final Settlement is Rejected
The lower the amount that you are offering, the more chance there is that your offer of settlement will be rejected. Do not despair, just go back to the creditor and give reasons and evidence as to why you are not able to increase your offer to them. Then again make your offer to the creditor, stating clearly that you are not able to increase payments to them! You will more than likely, be repeating this on a regular basis.
Do I offer a Full and Final Settlement over the Phone
No, no, no, no!!! Make sure that you have all your correspondences in writing! Remember, the creditor is trained to harass, manipulate, and even at times lie to you. (Yep, I have often heard creditors lie to me on the phone).
If I Have Multiple Debts How Do I know How Much to Pay Each Creditor
If you have a few creditors and you want to do a full and final settlement with all of them, you will then need to do a pro rata split calculation. In this post you will see: How to do a pro rata split calculation. If you have any difficulties in working out the pro rata payments, just leave me a comment below and I will calculate it out for you.
What Do I Need to Send a Creditor for a Full and Final Settlement
Similar to the DIY Debt Management Plan You will need to send an income and expenditure to your creditor so that they can see that you are not in a position to make regular payments. Rather than showing monthly payments, this should show what is being offered as a full and final settlement.
Evidence of Full and Final Settlement Achieved
If you do a search on this site for Full and Final Settlement, you will see many examples of good full and final settlements that have been achieved. As you will see from the letter Above:
A debt with Egg of £11,160 .63 was settled in full and final settlement for £2812.00. This settlement was negotiated with Fredrickson International Ltd, there were collecting on behalf of Egg.
This works out at approximately 75% discount, saving the client £8348.00
What if My Full and Final Offer is Rejected by Creditor?
Do not worry, if your offer of a full and final settlement is rejected by a creditor, Obviously a creditor wants as much money as possible and you want to settle the debt at a lower figure. Very rarely will a full and final offer be accepted immediately. As soon as your full and final offer is rejected, write to the creditor and show them why they should accept your offer. Search this site for more full and final offer information.