Debt consolidation by a full and final settlement is where a borrower makes an offer of a one-off partial payment to a creditor in exchange of the full settlement of a debt.
A full and final settlement can either be an informal agreement, or as part of a formal IVA.
When this type of Debt Consolidation is suitable.
Full and final settlements are suitable when you have access to a lump sum of money, but insufficient reliable ongoing income to make continuous monthly payments. In the case of an IVA, the lump sum needs to be at least 30% of the total debt.
A full and final debt consolidation is often the best way to proceed if your creditors will agree as your debts will be paid off without any deterioration to your credit rating. There must be a reasonable reason why your are not able to repay your debts by the terms of your original credit agreement.
How we make a full and final offer
We take a financial statement from you, detailing your income and essential expenditure, including all your credit repayment obligations. We explain the situation to your creditors; that you can’t afford your regular payments, but you can afford a one-off payment to repay a chunk of the debts now.
We draw up payment ammounts pro-rata based on how much you owe each. This is the only way it can be as each creditor must be treated equally.
Raising money for a full and final payment offer
Typical sources of capital to make a full and final offer include:
- Sales of assets
- Debt consolidation loan
- Remortgage
- Gift from family or friends
- Inheritance or other windfalls