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At a glance: Settle your debts by paying less than you owe with a single larger payment.
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This summary covers England and Wales
For a version of this summary that covers Scotland, please click here.

What are full and final settlement offers?

With a full and final settlement, you offer a lump sum payment to your creditors to completely pay off your debts. The lump sum is less than the total you owe. This can be helpful if you receive some money unexpectedly. 

How do I make an offer?

To make a full and final settlement offer, you must: 

  • Make sure it’s done in writing. You can use our full and final settlement offer sample letter to help 
  • Avoid sending payment until the creditor accepts your offer in writing. 
  • Keep a record of all correspondence. 

If you are settling a larger debt, you could ask a solicitor to draw up an agreement. This is not normally necessary. 

How to work out offers

  • If you have more than one creditor you can offer to divide the lump sum among them. Each creditor should receive a share of the lump sum in proportion to how much you owe them. If you would like advice on how to do this, you can call us for free. 
  • We can advise you how to determine the amount for each offer. It’s a good idea to show a breakdown to creditors so they can see you have treated them fairly.  
  • If some of the creditors refuse, write to them again and ask them to reconsider. Tell them if any of your other creditors have accepted the offer and explain your circumstances again. 

Your credit reference file

If creditors accept your offer, make sure they agree in writing to change your credit reference file to show the balance has been paid. Make sure to: 

  • Check changes with credit reference agencies . Each account should be closed with a zero balance.  
  • Be aware of a possible ‘P flag’ for ‘partial settlement’.  

Learn more about this topic

If you want to learn more about this topic, you can read our in-depth guide.

Read in-depth-guide

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