Full and Final settlement

This is a settlement made individually with each creditor, agreeing a full and final settlement of the amount owed. If the process is
handled well, and there are up to 30 separate stages, it is possible to negotiate a surprisingly good settlement.

Advantages

• The majority of the debt is written off in many cases.
• There is a one-off payment, therefore no long term arrangements.
• Average time-scale to implement of 6 to 18 months, allowing time to build up funds for a settlement offer.
• Agreement with each creditor, there is no veto or majority vote.
• Doesn’t involve officials or the courts.

Disadvantages

• A lump sum is required.
• Creditors continue to chase until a settlement is agreed.
• No guarantee that all creditors will settle.

Case Study - Full & Final Settlement

Mr B had unsecured debts of £160,000, a property worth £235,000 and a mortgage of £140,000. His total outgoings, including debt servicing, was £46,000 a year with an income, after tax, of £40,000. Before meeting debtDr he had considered remortgaging but didn’t think he could raise sufficient funds to settle his debts. After meeting debtDr, a mortgage broker arranged a £200,000 re-mortgage releasing £60,000 cash towards a settlement. After lengthy negotiations the creditors agreed to settle the debt at 33p in the £, costing Mr B £52,800.