What is full and final settlement?

A full and final settlement is an agreement with your creditors (the people you owe money to) to make a once off and final payment to clear your outstanding debts. The actual payment may be much less than the total debt amount in return for a quick once off payment.

You may find a full and final settlement is useful if you are going to receive a lump cash sum for example from the proceeds of a house sale and you wish to use the money to pay of your outstanding debts.

An Example

For example if you were to sell your house and you were to receive £7,000 as a cash ‘lump sum’ and you had un-secured debts of £12,000 that you were struggling to pay off. You could offer the £7000.00 payment as a full and final settlement offer to clear the £12,000 total debt.

By doing this you would be saving £5000 and the debt would be cleared and settled.

This is off course subject to your creditor agreeing to accept this amount.

A creditor’s agreement to pay off and clear your debts

Your creditor agrees to clear any outstanding debts in return for the one off payment as a final settlement of the debts. A full and final settlement can vastly reduce the total amount you have to pay back as the example above explains.

If you need any further help on full and final settlement please contact us for free advice that is specific to your circumstances. We can act upon your behalf and negotiate with your creditors to reduce your debts.

Best Wishes, Susan.

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