A full and final settlement letter is form used to ask your creditors to pay one large lump sum payment, which is less than the full amount owed to them.

In return for this lump sum payment the creditors may agree to writing off the rest of the debts that you may have accumulated.

There are a number of reasons why you might be able to offer a full and final settlement to your creditors. For example, you may have come into some money or a family member may have lent you some money to pay back your creditors. You also may have savings that you’re going to us to pay down your debt. The important part of the letter is to clearly state that this money will not be around forever otherwise your creditors may ask you to pay the full amount.

Making an offer can be done by finding a full and final settlement letter template on the Internet and then sending it in.

Another important part of the process is to make sure that your creditor agrees to the settlement in writing. Keep a copy of the agreement in case a dispute arrises at a later date over your debt. Most people wont sent the lump to the creditors until this is confirmed and that is likely the best route to go with it.

The good thing about these letters is that it can help you avoid bankruptcy and IVAs so you should look into these opportunities where possible.

It is always good to get third party to send over the money on your behalf. It makes the agreement more legally binding if the creditor is to accept the money in this manner rather than taking it directly from you. Another way to be safe is to get a solicitor to write up a formal agreement and have you and your creditor sign this document.

This may not be necessary but sometimes it is better to be safe than sorry. If your debts are rather small, then this will likely not be necessary.