"Friendly, helpful, put us at our ease, really easy to talk to"
Mr & Mrs C., Tipton, West Midlands
A “Full and Final” debt settlement can be considered in circumstances where the borrower is able to raise a sum of cash that his creditors may consider in full and final settlement of his outstanding debt with them.
This Glossary article demonstrates how the full and final settlement works, and discusses the potential advantages and disadvantages of the scheme.
Table of Contents:
Increasing levels of consumer debt problems in the United Kingdom in recent years has led to a variety of ways in which borrowers can be helped to manage their credit. Shire Direct has introduced an extensive range of Debt Management solutions to accommodate and assist with the many differing categories of personal debt circumstances.
This method of settling debt involves offering your creditors a lump sum in full and final settlement of your indebtedness. For example, let us suppose you have unsecured debts amounting to £20,000, but you cannot afford to continue making your contractual monthly repayments, you may be in a position to offer £14,000 in “Full and Final” settlement of your debts.
If your creditors will accept this amount, the remaining balances on your debts are written-off.
Let’s just have a look how this works in practice with a couple of worked examples:
Case Study 1
Mr & Mrs Q were struggling to maintain their financial commitments on two personal loans which had total amount owing of £16,200 and a combined monthly payment of £589. They had started to default on their payments….
One of Mr Q’s family members had recently left him an inheritance of approximately £11,300. Our experienced advisors then arranged a “Full & Final” settlement on their two loans, which enabled them to settle their debts using this sum as the final payment. This equated to a reduction of 31% on their loans as well as becoming debt free!
Case Study 2
Mr R had a repossession hearing in 6 days time. He had missed his last 4-months payments and so had been unable to obtain a remortgage or secured loan to pay off the arrears. He also had an unsecured loan of £8,400 that he had also started to miss payments on.
The Solution: Arrange a Sale and Rent Back scheme. Firstly this repays his mortgage in full, and ensures Mr R is able to remain in the property. This action will also clear his arrears and will provide him with a small cash surplus.
Furthermore, with the product selected, 12 months rent is also included, and this means that Mr R will not have to worry about making further rent payments for a whole year.
Using the surplus sum left over from the sale, Mr R would also be in a position to make a “Full and Final” settlement on his unsecured debt, which would amount to a 30% reduction.
At the end of the 12 months - Mr R will have a number of options. He can:
Obviously, the “Full and Final” debt settlement can only be considered where you are able to raise a lump sum to offer your creditors in settlement of your unsecured borrowings with them. The lump sum necessary can often be raised from any one, or a combination of the following:
Thus negotiations will be entered into with your unsecured creditors in order to settle the accounts at a discounted amount. This can be as little as 60% of your outstanding balances, and therefore this option can be an extremely effective way of managing your debt, particularly if you have acquired a lump sum, maybe from an inheritance, or gift from a relative, even though it may not be quite sufficient to repay all of your unsecured credit.
Similarly, if you own a property and have a proportion of equity that can be offered to your creditors, a one-off payment in full and final settlement of your debts could well be acceptable to your creditors.
Advantages
Disadvantages
Yes we can!
…provided that you can raise the appropriate lump sum, either from a relative or friend, or if you are a homeowner and have equity in your property, by arranging a remortgage or secured loan.
Interested – like to know more?
Then please don’t hesitate to call us. Here at Shire Direct we pride ourselves in being able to provide our customers with the individual attention that many of our contemporaries lack, and we always strive to make the process as fuss-free and painless as possible.
We will of course undertake an analysis of your financial situation, and from this information, we will usually be in a position to provide you with an indication as to how you can offer your creditors a lump sum in full and final settlement of your borrowings.
So, whatever your circumstances, and whatever your needs, our service is geared to providing the most appropriate solution for you. Thus if you are experiencing problems with debt, and have difficulties in making ends meet, don’t hesitate to call us. Our aim is to leave our customers with the simple task of signing the documents, in the sure knowledge we have carefully weighed up your situation, discussed the various options open to you, and completed the paperwork on your behalf.
If you would like to discuss how a “Full and Final” settlement could benefit you, then please call us in confidence. You’ll find our approach to be friendly yet professional and not in the slightest bit stuffy.
Our Help-line, 08000 282 281 is open until 10.00pm daily, including weekends, and your call is free and without any obligation.
Make that first step of regaining control of your finances – call us today!
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
Claim £100 worth of Argos Vouchers upon completion of your transaction throughout 2008. Terms and conditions apply - see our Vouchers Special Offer page for full details.
Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.
