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Settlement offers

If you’ve received a lump sum of money, you can use this to make a settlement offer to your creditors.

You can get a lump sum of money from selling an asset, such as a property or vehicle, receiving an inheritance, or it could be a gift from family or friends. If you’ve got a lump sum of money you can use this to clear the outstanding debts that you have.

Depending on how much money you have, you might be able to repay all of the money you owe and become debt free.

If the lump sum you have is less than the amount you owe to your unsecured debts, you can make ‘full and final settlement’ offers. The offer can be less than the outstanding balance but, if it’s accepted by your creditor, it can be classed as full payment.

How full and final settlement offers work

Firstly you need to work out how much to offer your creditors and then send this offer to them in writing. You must always get your creditors to say they accept your offer in writing before you send them any money.

You may find that not all your creditors are willing to accept your offer of settlement and you’ll have to negotiate with each one individually. It is possible that none of your creditors will accept a full and final settlement.

If your full and final settlement offer is rejected, you may be able to use the money to apply for an IVA in England, Wales or Northern Ireland, or a trust deed in Scotland. These are legally-binding debt solutions arranged by an insolvency practitioner which write off part of your debts.

Usually IVAs or trust deeds are based on paying regular monthly instalments, but if you have a lump sum of money available you may be able to agree to paying this as a one-off amount instead.

Get some expert help and advice

If you’ve received a lump sum of money and you’re struggling to repay your debts, use our online Debt Remedy tool or call our Helpline on 0800 138 1111 (free from all landlines and mobiles). We'll provide you with a budget and debt solution that’s specifically tailored to your situation, so you know the advice you’re getting is the right advice for you.

If it’s the best solution for you, we have a specialist team who can help you make full and final settlement offers to your creditors.

Settlement offer FAQs

Will making settlement offers affect my credit file?

If the creditor marks your credit file as ‘settled in full’ this shouldn’t affect your credit rating. If a creditor marks it ‘partial settlement’ it shows other lenders that the debt was cleared for less than what was outstanding. This will appear on your credit file for 6 years and might make it harder for you to take out credit.

Do my creditors have to accept settlement offers?

If you’re offering less than the outstanding balance, your creditors can refuse an offer. Different creditors have different policies for accepting offers.

Helping you become debt free...

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Foundation for Credit Counselling (trading as StepChange Debt Charity) is a company limited by guarantee registered in England and Wales (Company No: 2757055 ) and a charity registered in England and Wales (Registered Charity No: 1016630). Registered office: Wade House, Merrion Centre, Leeds, LS2 8NG. Consumer Credit Counselling Service (Scotland) trading as StepChange Debt Charity Scotland is a company limited by guarantee registered in Scotland (Company No: SC162719) and a charity registered in Scotland (Registered Charity No:SC024413). Registered office: 33 Bothwell Street, Glasgow G2 6NL. Authorised and regulated by the Financial Conduct Authority.

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