Debt Settlement Offer

A Debt Settlement Offer, also known as a full and final settlement offer, is a debt solution that will allow you to repay what you owe with one lump sum payment.

It is a way to pay your debts off in one large lump sum. This solution could be suitable for you if you have come into a financial ‘windfall’ that could help you to clear off your debts. This could be money from a relative or friend, inheritance, sale of an asset or compensation.

If the lump sum is less than what you owe, you may be able to make an offer to creditors to pay off what you owe and write off the sum leftover. The money is shared equally amongst all of your creditors, or you can offer to settle specific debts if you have less than the full sum owed.

Hillcrest Finance can help anyone considering a debt settlement offer.

Is a Debt Settlement Offer a good idea?

A debt settlement offer can be a good idea when you’re in a position to pay a significant amount, but not all, of your debts. The offer can be helpful if creditors are lenient and will accept a smaller amount upfront.

How does a Debt Settle Offer work?

The typical process involves contacting your creditors to let them know you can pay a significant portion of your debts in one payment, either by yourself or through an adviser. Your creditor has to confirm in writing that they’ll accept your offer. If they do, you can pay them a lump sum and the remaining debt is written off.

Proof of correspondence and payments must be kept.

Advantages of a Debt Settlement Offer

A DSO may be a good option as:

  • Acceptance means you’ll end up paying less overall
  • A lump-sum payment means you’re not paying over a set period
  • It helps avoid declaring bankruptcy

Disadvantages of a Debt Settlement Offer

A DEO may not be the best idea as:

  • You’re giving up a lump sum of money
  • Creditors may take action by refusing the initial request
  • You may have to negotiate with each creditor individually

Can I use a Debt Settlement Offer if I have multiple creditors?

You can, although the same percentage amount must go to each creditor based on what’s owed. Remember, when dealing with multiple creditors, each has to be treated as an individual case, and they may decide to deny your offer.

If you’re dealing with debt from multiple sources, it may be advisable to get in touch with Hillcrest advisers to discuss a Debt Management Plan.

How long do Debt Settlement Offers last?

The payment can write off the debt in one action, but that doesn’t mean evidence of debt is wiped away. Anyone going down this route will have to have these debts noted as being only partially settled in credit reports for up to six years.

This can have knock-on effects if you’re looking to apply for some form of credit within that time frame. It can take at least a year after the offer is settled to see your credit score improve.

What alternatives are there to Debt Settlement Offers?

If a creditor denies your offer, or you want an alternative to help pay off debts after inheriting a sum of money, there are other options to consider. For anyone living in Scotland, a Trust Deed may be the most suitable route. Anyone living in the rest of the UK could find that an IVA works for them.

Talk to Hillcrest Finance today

Need help figuring out if a Debt Settlement Offer is the right option for you?

Call Hillcrest Finance for a brief chat on 0141 478 0862, or get in touch via WhatsApp.

Get in touch with us about a Debt Settlement Offer today