If you are able to offer your creditors a lump sum of money, this can sometimes be used to negotiate a Full and Final Settlement. This means that, if the creditor accepts the lump sum in settlement, that they will agree to write off the rest of your debt.
If you go through Full and Final Settlements with CAP, we’ll negotiate with your creditors, to see if they’ll allow you to pay a lump sum in return for them writing off a portion of your debt.
You may get a lump sum of money in several ways, including: selling a property or vehicle you own, inheriting money, or receiving a financial gift. If you are thinking about selling something worth a lot of money we’d recommend seeking advice before doing so.
How do I apply for Full & Final Settlements?
1. Getting started
We’ll take a look at your individual circumstances to see if Full and Final Settlements is a good option for you. Usually, Full and Final Settlements is a good option if you have a lump sum (or are able to get one), depending on the amount you have, the types of debt you have and how much you owe.
2. Paying in your funds
If Full and Final Settlements is a good option for you, we’ll let you know we think it’s worth CAP negotiating this on your behalf.
For debts that involve taking out credit (e.g. loans, credit cards, etc) we’ll agree with you an amount from a lump sum that you will pay into your CAP Plan, which we will use to pay Full and Final Settlements once agreed with your creditors. We may also need you to send us documents that show where your lump sum has come from.
For debts that don’t involve credit (e.g. telephone or internet debts, utility arrears from a previous provider, rent from a previous address and landlord, etc) we will be able to negotiate on your behalf, but will ask you to make an agreed lump sum payment directly yourself.
Please note that priority creditors such as council tax, current rent, current gas and electricity suppliers are unlikely to accept a full and final settlement offer. If you have a debt with a priority creditor it will need paying in full.
3. How to make a full and final settlement offer
Once any agreed amounts have been paid into your CAP Plan as agreed, we will then start negotiating with your creditors.
When your creditors agree to a settlement, they will write off the remaining balance once the agreed amount is paid to them from your lump sum.
It’s hard to say how much will be accepted by your creditors. Some may accept a percentage of the debt, and others (particularly priority debts like utility debts, benefit debts and HMRC) may only accept full payment.
Please note, the negotiation process can take weeks or months, depending on your situation. It is also at the creditor’s discretion as to whether they accept the offers we propose.
4. Negotiations are complete
With partial settlements, the debt will be written off, and your creditor cannot chase for any more money, but this will remain on your credit record for six years after the settlement date (or six years after the default date if that’s sooner).
If there are any debts outstanding at the end of this process, we’ll help you with a plan for sorting those.