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UPDATED - Full & Final Settlements Explained
[COLOR=#ff8000][SIZE=5][CENTER]Full & Final Settlements Explained[/CENTER]
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[COLOR=#ff8000][SIZE=5]What are full and final settlements....[/SIZE][/COLOR]
Full & Final Settlements (known as F&F) simply means that you ask the creditors to let you pay a lump sum which is less than the full balance you owe on the debt. In return for having a lump sum payment the creditor agrees to write off the rest of the debt. You may be able to do this because you have come in to some money or have some savings you can use. Sometimes a friend or relative offers to put forward a lump sum to help you pay off the creditors. Your circumstances may be very unlikely to change for the better in the future. It is very important that you explain to the creditors that the money will not be available forever and the friend or relative will not make the payments unless the offer is accepted.
[COLOR=#ff8000][SIZE=5]How to make an offer....[/SIZE][/COLOR][LIST=1][*]You can use the sample letter here: [B]--->[/B] [B][URL="http://forums.all-about-debt.co.uk/showpost.php?p=9120&postcount=3"][COLOR=#ff8000]F&F Offer Template[/COLOR][/URL][/B] to make full and final settlement offers to your creditors, also make sure you keep copies of any letters you send.[*]Make sure the creditor accepts your full and final settlement offer in writing; and retain a copy in case of a dispute which [size=5]can happen years later.[*][U]Never[/U] send a lump sum payment before the offer is accepted.[*]Ask a third party such as a friend or relative to send the money on your behalf. This helps your agreement to be more legally binding if the creditor accepts the money via a third party.[*]If you are settling a debt that is large or particularly important, you could have a formal agreement drawn up by a solicitor and signed by you and the creditor. This is not normally necessary and not really suggested.[*]Make sure the creditor agrees in writing to change your credit reference file details to show the balance is "satisfied" or "partially settled" and the date; see [COLOR=#0000ff][B]Rizzles[/B][/COLOR] thread on this here: [B]--->[/B] [B][URL="http://forums.all-about-debt.co.uk/showthread.php?t=238"][COLOR=#ff8000]CRA's & Partial Settlements[/COLOR][/URL][/B]. Check this have been done by asking the credit reference agencies for a copy of your credit file, as detailed here: [B]--->[/B] [B][URL="http://forums.all-about-debt.co.uk/showpost.php?p=75&postcount=2"][COLOR=#ff8000]How to obtain your Credit File[/COLOR][/URL][/B].[/LIST]
[COLOR=#ff8000][SIZE=5]How to work out offers of payment in full and final settlement....[/SIZE][/COLOR]
You may have a lump sum that you need to divide up amongst several creditors. The usual way of doing this is to make "pro-rata" offers. This means that each creditor gets a fair share of the money available. The creditor you owe the most to will get the biggest share of the money and the creditor you owe the least to will get the smallest share; see the formula detailed below;
[COLOR=#ff8000][SIZE=5]Forumula....[/SIZE][/COLOR][LIST=1][*]Lump Sum Available [COLOR=#ff8000][B]x[/B][/COLOR] Each Debt[*][COLOR=#ff8000][B]÷[/B][/COLOR] Total Amount Owed to Creditors[*][COLOR=#ff8000][B]=[/B][/COLOR] Offer to the Creditor[/LIST]
To use an example, lets say you have £20,000 owing between 4 creditors and you're able to raise £4,000 to generate some lump sums. Assuming you owe:
[LIST=1][*][B]Card[/B] - £4,600[*][B]Bank[/B] - £2,400[*][B]Loan[/B] - £9,000[*][B]Debt[/B] - £4,000[/LIST]
Then you'd use the formula as follows:[INDENT]£4,000 (Lump Sum Available) x £4,600 (Card 1)
÷ £20,000 (the total amount you owe to creditors)
= £920 (offer to Card 1)
[/INDENT]Your offer to Card 1 is £920. You then do the same calculation for each creditor, using each individual debt in the calculation meaning your overall example formula should look something like this:[INDENT][B][COLOR=#ff0000]Type[/COLOR][/B] - [B][COLOR=#4000ff]Debt[/COLOR][/B] - [B]Offer[/B][/INDENT][LIST=1][*][COLOR=#ff0000]Card[/COLOR] - [COLOR=#4000ff]£4,600[/COLOR] - £ 920[*][COLOR=#ff0000]Bank[/COLOR] - [COLOR=#4000ff]£2,400[/COLOR] - £ 480[*][COLOR=#ff0000]Loan[/COLOR] - [COLOR=#4000ff]£9,000[/COLOR] - £1,800[*][COLOR=#ff0000]Debt[/COLOR] - [COLOR=#4000ff]£4,000[/COLOR] - £ 800[/LIST]
Send offer letters to all your creditors along with a table like the one shown above. It is helpful if creditors can see that they are all receiving an offer of a pro-rata settlement, so they also know they are all being treated the same and fairly.
[/SIZE][/COLOR]
[COLOR=#ff8000][SIZE=5]What are full and final settlements....[/SIZE][/COLOR]
Full & Final Settlements (known as F&F) simply means that you ask the creditors to let you pay a lump sum which is less than the full balance you owe on the debt. In return for having a lump sum payment the creditor agrees to write off the rest of the debt. You may be able to do this because you have come in to some money or have some savings you can use. Sometimes a friend or relative offers to put forward a lump sum to help you pay off the creditors. Your circumstances may be very unlikely to change for the better in the future. It is very important that you explain to the creditors that the money will not be available forever and the friend or relative will not make the payments unless the offer is accepted.
[COLOR=#ff8000][SIZE=5]How to make an offer....[/SIZE][/COLOR][LIST=1][*]You can use the sample letter here: [B]--->[/B] [B][URL="http://forums.all-about-debt.co.uk/showpost.php?p=9120&postcount=3"][COLOR=#ff8000]F&F Offer Template[/COLOR][/URL][/B] to make full and final settlement offers to your creditors, also make sure you keep copies of any letters you send.[*]Make sure the creditor accepts your full and final settlement offer in writing; and retain a copy in case of a dispute which [size=5]can happen years later.[*][U]Never[/U] send a lump sum payment before the offer is accepted.[*]Ask a third party such as a friend or relative to send the money on your behalf. This helps your agreement to be more legally binding if the creditor accepts the money via a third party.[*]If you are settling a debt that is large or particularly important, you could have a formal agreement drawn up by a solicitor and signed by you and the creditor. This is not normally necessary and not really suggested.[*]Make sure the creditor agrees in writing to change your credit reference file details to show the balance is "satisfied" or "partially settled" and the date; see [COLOR=#0000ff][B]Rizzles[/B][/COLOR] thread on this here: [B]--->[/B] [B][URL="http://forums.all-about-debt.co.uk/showthread.php?t=238"][COLOR=#ff8000]CRA's & Partial Settlements[/COLOR][/URL][/B]. Check this have been done by asking the credit reference agencies for a copy of your credit file, as detailed here: [B]--->[/B] [B][URL="http://forums.all-about-debt.co.uk/showpost.php?p=75&postcount=2"][COLOR=#ff8000]How to obtain your Credit File[/COLOR][/URL][/B].[/LIST]
[COLOR=#ff8000][SIZE=5]How to work out offers of payment in full and final settlement....[/SIZE][/COLOR]
You may have a lump sum that you need to divide up amongst several creditors. The usual way of doing this is to make "pro-rata" offers. This means that each creditor gets a fair share of the money available. The creditor you owe the most to will get the biggest share of the money and the creditor you owe the least to will get the smallest share; see the formula detailed below;
[COLOR=#ff8000][SIZE=5]Forumula....[/SIZE][/COLOR][LIST=1][*]Lump Sum Available [COLOR=#ff8000][B]x[/B][/COLOR] Each Debt[*][COLOR=#ff8000][B]÷[/B][/COLOR] Total Amount Owed to Creditors[*][COLOR=#ff8000][B]=[/B][/COLOR] Offer to the Creditor[/LIST]
To use an example, lets say you have £20,000 owing between 4 creditors and you're able to raise £4,000 to generate some lump sums. Assuming you owe:
[LIST=1][*][B]Card[/B] - £4,600[*][B]Bank[/B] - £2,400[*][B]Loan[/B] - £9,000[*][B]Debt[/B] - £4,000[/LIST]
Then you'd use the formula as follows:[INDENT]£4,000 (Lump Sum Available) x £4,600 (Card 1)
÷ £20,000 (the total amount you owe to creditors)
= £920 (offer to Card 1)
[/INDENT]Your offer to Card 1 is £920. You then do the same calculation for each creditor, using each individual debt in the calculation meaning your overall example formula should look something like this:[INDENT][B][COLOR=#ff0000]Type[/COLOR][/B] - [B][COLOR=#4000ff]Debt[/COLOR][/B] - [B]Offer[/B][/INDENT][LIST=1][*][COLOR=#ff0000]Card[/COLOR] - [COLOR=#4000ff]£4,600[/COLOR] - £ 920[*][COLOR=#ff0000]Bank[/COLOR] - [COLOR=#4000ff]£2,400[/COLOR] - £ 480[*][COLOR=#ff0000]Loan[/COLOR] - [COLOR=#4000ff]£9,000[/COLOR] - £1,800[*][COLOR=#ff0000]Debt[/COLOR] - [COLOR=#4000ff]£4,000[/COLOR] - £ 800[/LIST]
Send offer letters to all your creditors along with a table like the one shown above. It is helpful if creditors can see that they are all receiving an offer of a pro-rata settlement, so they also know they are all being treated the same and fairly.
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