If you get a lump sum money, you may be able to utilize this amount repay your debts by putting together a full and final settlement.
You may be able to get a lump sum by selling your asset, or when you get a windfall or a money that can be a gift from family or friends. Once you do, it’s always best to seek debt advice so we can help you in making a full and final settlement offers to your creditors
How full and final settlement offers work?
Depending on your available lump sum, it might cover your entire debts to get a fresh new start.
However, if the money you have cannot suffice your total debts, you can consider a full and final settlement offers. This means proposing to write off the remaining of your debt by offering the lump sum money you have available.
How to make a settlement offer to my creditors?
You can put together a settlement offers towards your debts by fairly sharing the lump sum among your creditors.
Though not all of your creditors may accept a lower settlement offers, they’ll likely to agree if it can take longer for them recover the debt.
- Primarily you need to determine the amount that you can offer to your creditors and make them aware by sending it in writing.
- Before you send any amount, confirm if your creditor agrees to the settlement by contacting them.
- You should keep creditors letters about the settlement offer just in case you need to use these letters in the future. Keep these letters for at least six years after paying the settlement.
- You may have to negotiate to your creditors individually in making the offer since not all might be willing to agree. Besides, it would be possible that all your creditors will reject the settlement.
- When your settlement is accepted, ensure sending the payment to your creditors on the date they’ve specified. You should also retain the proof of payment.
What percentage can I offer a full and final settlement?
This will depend on the amount of money you have available and on what you can afford. It is a must that you offer equal amounts to each of your creditors as a full and final settlement. If you’re lump sum is 80% of your total debts, each creditor should get 80% of the amount you owe.
Will the settled debts be removed from my credit report?
When your creditor agrees to full and final settlement, this will be marked as partially settled on your credit report. This means that your debts are written off or settled less than what you originally owe. Creditors or lenders seeing this on your file will be hesitant to lend you money. Some may approve you in taking out credit or loan but usually with higher interest rates.
When fortunate to receive a lump sum of money, while juggling with debt payments, make use of our debt advice tool to get impartial debt advice.
You can also call us so we can help you create a realistic budget to determine if you can afford a full and final settlement. You should talk to our team of experts so they can figure out how we can help you best.