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Letter 5 - Offer of a full and final settlement Template letter

Request a write off of a debt (sometimes called a lump sum settlement).

The following letter template is to be used by a debtor who cannot pay their contractual monthly payments to their creditors, but may be in a position to pay a lump sum as a one off settlement of the debt.

Suitable for:
  • Someone who has a debt or debts that are unaffordable, and;
  • Someone who has or can raise a lump sum of money, perhaps from a family member or the sale of an asset etc.
Advantages:
  • This is a quick process and can resolve an otherwise lengthy process in a short space of time.
  • This can be done through a formal IVA as a one of payment offering protection through the legal process.
  • If accepted you pay what is affordable and the remaining amount is written off.
Disadvantages
  • If you approach the creditor informally outside of an IVA, the creditor does not have to accept and if you have property with equity or similar assets, the creditor may take court action instead of agreeing to write off the debts.
  • If a family member has provided the lump sum, you may have to repay that in future, so the debt may not have actually gone away.
  • You could be pressured to offer more than you can afford.

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