Full and Final Settlement Offers
If you haven't already had previous advice, it is highly recommended that you answer all of the questions on our Debt Options page which will help you decide which option to follow. You should carefully consider all options before deciding to continue further.
If you have any doubts, you should get full, independent, professional advice.
Explanation (including Advantages and Disadvantages)
Further information on how to continue
If you have an available lump sum of money or may have access in the future then a creditor may accept or consider an offer of an amount less than which is actually due as early settlement.
The above is particularly likely if you have little or no available income, no substantial assets and your financial situation is unlikely to improve or even worsen. In such circumstances creditors are likely or may recognise that acceptance of a cash lump sum makes commercial sense.
If you have more than one creditor any lump sum should usually be distributed between them in proportion to the amount owing to each (pro-rata). Making proportional settlement offers/ payments would not make the arrangement legally binding see below for information on making the arrangement legally binding.
Is a Full and Final Settlement legally binding?
There will be a legally binding agreement if either
- an arrangement is made with all your unsecured creditors: or
- the funds are made available by a third party (for example, a relative) and the offer is made by him / her: or
- the agreement is embodied in a formal document known as a 'deed' The services of a solicitor will be required if you want a deed drawing up - for example, if you have any doubts as to the trustworthiness of any particular creditor
How to Make Full and Final Settlement Offers
This letter is designed to help you negotiate a full and final settlement offer with a creditor. This is a type of offer where you ask the creditor to accept part of the amount you owe and write off the rest.
This letter is designed to help a third party negotiate a full and final settlement offer with a creditor. This is a type of offer where a third party asks the creditor to accept part of the amount you owe and write off the rest.
- Why are the letters marked as "Without Prejudice"?
The basic meaning is without loss of any rights. It is a term used when two parties are in dispute, and one makes a settlement offer to the other. It puts without prejudice on its offer to make it clear that the settlement offer should not be construed as a waiver of rights. Importantly, communication marked without prejudice cannot be used in evidence in court proceedings if the attempts at settlement fail.
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