You can make settlement proposals to all of your creditors, dividing the lump money equitably among them. Not all creditors will agree to accept lower settlement offers. They are more inclined to agree if it would otherwise take a long time.

• First, you must determine how much to give your creditors and then submit your offer in writing to them
• Always obtain written confirmation from your creditors that they accept your offer before sending them any money
• Save any correspondence from your creditors regarding the settlement offer in case you need to refer to them again in the future. After you’ve paid the settlement sum, we recommend retaining these letters for at least six years
• You may discover that not all of your creditors are ready to accept your settlement offer, and you will have to negotiate with each one individually. There is a chance that none of your creditors will accept a full and final settlement
• If your proposals are approved, make sure to pay each creditor by the deadline they provide. Keep your payment receipt.

Full and Final Settlement will cover the unsecured debts like:

• Credit cards
• Store Cards
• Personal loans
• Medical bills
• Student loans
• Bounce Back Loans (Sole Traders only)
• Personal Guarantees

It depends on your financial situation, but as a full and final settlement, you should provide equal sums to each creditor. For example, if your lump payment represents 75% of your overall debt, you should offer each creditor 75% of what you owe them.

If you reach an agreement for a full and final settlement, your creditor will label the obligation as ‘partially resolved’ or ‘partially settled’ on your credit report. This informs future creditors that the loan was settled for less than the entire amount, which may influence their choice to lend to you. The account will be erased from your credit report six years after it was partially resolved, or six years after it defaulted, whichever comes first.

• your debt will be discharged and you can make a fresh start
• your debt will be marked as ‘settled’ by your creditors
• you avoid bankruptcy and legal actions against you
• clearing your debt means you can start to improve your credit score or credit rating
• even if you only pay off one creditor, you are improving your debt situation
• if a debt has been defaulted, it will drop off your credit record after 6 years

• you must have adequate finances to make an offer
• your creditors may insist that you pay off all of your debts
• an effect on your credit file for six years, which shows that the borrowing has only been partially repaid.