Dealing With Debts, Options Explained

a) Full and Final Settlement Offers

A Full & Final Settlement Offer is an offer or part payment to creditors in the form of a one off lump sum payment In turn for having the remainder of the debt written off. A Full and Final Settlement Offer could be a suitable strategy to clear debts if you have access to a lump sum of money - this may be from-

the sale of assets such as property / assets
savings
re-mortgaging
third party donation from family / friends
windfall such as lottery / inheritance

Why might creditors accept?

avoid expenses of trying to recover / legal action that is not guaranteed to be successful
may prefer a smaller overall lump sum now rather than small instalments over a long period
the debtors alternative solutions such as bankruptcy would mean no return to them

Some pros

if the offer is accepted you pay less overall
the debt would be paid off sooner allowing a 'fresh' start
creditors should mark the debts as satisfied
credit rating may improve

Some cons

no guarantees that the creditor(s) will accept
a lump sum may need to be accessed that could be used elsewhere
once creditors become aware that you have access to a lump sum they may demand payment of the full debt
clearing the debt in this way will not remove any default notice or county court judgement previously obtained from your credit record, they will remain on file for six years
issues around the arrangement being legally binding

Full & Final Settlement Offers should be made by the way of a pro-rata procedure with written evidence / proof from creditors confirming their full acceptance.

Next: Consolidation Loan / Re-finance / Mortgage