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Settlements on a DMP

During your debt management plan (DMP) you might come into a lump sum of money. With this extra money, you can look into making settlement offers. This is when you pay off some or all your debt balances with one large payment.

  This advice is only for people living in England, Scotland, Wales and Northern Ireland who are on a DMP. If you are not on a DMP with us, find out more about our settlements service.

Quickly find what you are looking for

  1. About the different types of settlement offers
  2. How our settlements team can help you
  3. Benefits and risks of settlements
  4. Going ahead with making settlement offers
  5. Common questions we are asked about settlements

About the different types of settlement offers

There are two types of settlement offers. These are full balance settlements and partial settlements. Find out more about them below.

Full balance settlements

A full balance settlement is when you can pay off the full amount you owe to a debt. When it is paid, your debt is marked 'satisfied' in your credit file.

Partial settlements

A partial settlement is when you can afford to pay a large amount towards a debt, but it is not enough to pay off the whole amount you owe.

The people you owe (known as your creditors) will consider writing off the amount left over if they are happy with the partial settlement offer.

When it is paid, the debt is marked 'partially satisfied' in your credit file.

How our settlements team can help you

Support with full balance settlements

Our dedicated settlements team will:

  • Find out exactly how much you owe right now: Our settlements team will contact each of your creditors to do this. Debt balances shown on your DMP are sometimes not exact due to added interest and charges
  • Send the payments for you: You make the agreed lump sum payment to us, and we share it out to each of your creditors for you

Our settlements team can give you information about making partial settlement offers if that is something you want to explore. They can also help if you would prefer to make the payments yourself.

Support with partial settlements

Our dedicated settlements team take care of the whole process for you. They will:

  • Find out exactly how much you owe right now: Our settlements team will contact each of your creditors to do this. Debt balances shown on your DMP are sometimes not exact due to added interest and charges
  • Write and send a proposal to your creditors: They could agree or reject your offers. If any of them reject your offers, our settlements team will discuss your options with you
  • Send the payments for you: You make the agreed lump sum payment to us, and we share it out to each of your creditors for you

Benefits and risks of settlements

Benefits of full balance settlements

  • You can clear all your debts in one single payment
  • Your DMP stays active while you wait
  • Our service is completely free
  • We have a dedicated settlements team who are ready to support you
  • We contact your creditors for you
  • You send one lump sum payment to us, and we share it between your creditors

Risks of full balance settlements

  • Your creditors can still go through the collections process until they get the payment
  • The amount you owe can increase if creditors keep adding interest and charges

Benefits of partial settlements

  • You can clear some or all your debt
  • Your DMP stays active while you wait
  • Our service is completely free
  • We have a dedicated settlements team who are ready to support you
  • We contact your creditors for you
  • You send one lump sum payment to us, and we share it between your creditors
  • Our settlements team will work out your offers on a pro-rated basis, meaning all creditors are treated fairly
  • You can change your mind at any time, and we will return your funds
  • You can edit your offers if you need to

Risks of partial settlements

  • Your creditors can still go through the collections process until they get the payment
  • The amount you owe can increase if creditors keep adding interest and charges
  • Creditors do not have to accept your offer, and they can come back with their own offer if they need you to pay more
  • Creditors can sometimes take a while to respond. Our settlements team will follow up with creditors every week
  • Partial settlements can stop you from applying for insolvency solutions (like IVAs and bankruptcy) if you are able to settle some but not all of your debts

Going ahead with making settlement offers

Before our settlements team can talk to your creditors, you need to have the money available.

  1. Call our review team: To let us know that you want to go ahead with settlements, first call our review team on 0300 303 5300. They are available Monday to Friday, 8am to 6pm
  2. Talk to our settlements team: The review team will pass your case to our settlements team who will arrange a phone appointment with you. During the appointment, they will talk to you about your options. Our settlements team will manage the process from start to finish and keep you updated
  3. Send us the lump sum payment for your settlement offers: Our settlements team will tell you when they are ready to take your payment and how to send it. We cannot make any offers until we have the payment. Your funds will be held against your account while we talk to your creditors. Your money is protected by the Financial Services Compensation Scheme (FSCS)
  4. Our settlements team will contact your creditors: They will keep you updated on your creditor's responses. We will then send the payments to your creditors if you are happy to go ahead

Common questions we are asked about settlements

Most 'unsecured' debts can be included in your settlement offer. These are things such as credit cards, overdrafts and loans.

Important debts (also called priority debts) need to be paid in full.

You cannot make partial settlement offers on:

  • Secured debts, such as a mortgage
  • Secured loans
  • Hire purchase on vehicles

You must also keep up with regular payments on priority bills, such as:

  • Mortgage or rent
  • Council tax and rates
  • Water and energy bills

Your credit file will already be affected as you will have been making lower payments than what you originally agreed through your DMP.

When you settle your debts, your credit file will show the debt as:

  • Satisfied or partially satisfied - if the debt has a default
  • Settled or partially settled - if the debt does not have a default

This can stay on your credit file for up to six years. It does not change your credit score, but lenders might still look at them when making decisions.

You can check your credit file for free using Experian or ClearScore.

We ask about any special circumstances so we can give your creditors a better view of your situation and help them understand why a settlement might be appropriate.

Special circumstances might include:

  • Health issues. You will need to send medical evidence to our settlements team if this applies to you. Ask our settlements team for help if you are unsure what medical evidence to send
  • Long-term unemployment
  • Age, if you are over 60
  • Bereavement or relationship breakdown
  • Anything else that affects your ability to pay

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