Full And Final Settlements: The Basics |
Making the Offer
(1) Send offer letters to all your creditors. (See
sample letter below).
(2) Include a table like the one above, so that the
creditors can see that they are all being treated
fairly.
(3) Make clear to your creditors:
(a) that your circumstances are extremely
unlikely to change for the better in the future;
(b) that the money will not be available
forever:
and
(c) that your friend or relative will not make
the payment unless the offer is accepted.
(4) Insist that the creditors accept your offer in
writing. And always keep a copy in case of any
dispute.
(5) Make sure the creditors agree in writing to change
your credit reference file details to show that the
balance is "satisfied". (You can later check that
this has been done by asking the credit reference
agencies for a copy of your credit file.)
(6) If the debt is particularly large or important, you
may wish to have a formal agreement drawn up by a
solicitor and signed by you and the creditors,
although this is not normally necessary.
(7) If some of the creditors refuse, write and ask them
to reconsider. Point out that other creditors have
accepted the offer and explain your circumstances
again.
Making the Payments
(1) Never send a lump sum payment before the offer is
accepted.
(2) Have a third party send the money on your behalf.
This helps to make the agreement more legally
binding.
Sample Letter
WITHOUT PREJUDICE
Dear Sir/Madam
Re: Account No/Reference No:
I write with reference to the money owed on the
above account. I am unable to offer to pay this
sum in full (Provide details of your circumstances and
financial situation).
However, I can raise £---- and I wish to offer this as an ex-gratia payment
in full and final settlement of the account.
This offer is made on the clear understanding
that, if accepted, neither you nor any associate
company will take any other action to enforce or
pursue this debt and that I will be released
from any liability.
I also request that, if accepted, you will mark
any entry on a credit reference agency file
relating to the above account as "satisfied" in
full.
Payment can be made within x days (or x weeks) of receiving your written agreement to this
offer. I look forward to receiving your reply.
Yours faithfully
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