Partial Settlements

Partial Settlements

If you have recently re-mortgaged and released equity, received a windfall, redundancy payment, or have inherited or been gifted a lump sum, you may be able to use this to try and settle some of your debts.

A partial settlement is a repayment which is less than the total amount of debt owing. Sometimes, depending on circumstances - such as how long it will take to pay your debt off and the amount of your current repayment – your creditors may be prepared to write off a chunk of your balance if you can pay them a lump sum.

This is something that you can arrange with your creditors directly and free of charge, however, we do appreciate that the prospect of contacting your creditors may be daunting for you.

We can negotiate with your creditors on your behalf to see if they will accept a partial settlement of your debt. We will also make the payments to them on your behalf and will take a portion of what we save you (compared with the full balance) as our fee.

Please note that if you are subject to a formal debt solution such as bankruptcy or an IVA, you will need to notify the Official Receiver or Insolvency Practitioner of any windfall you receive or which becomes due to you during your arrangement.

Created with Lunacy

Once the debt has been partially settled, the creditor will not try to pursue you for the remainder of the debt

Created with Lunacy

If the partial settlement offer is accepted you will pay back a lesser amount to your creditor than if you had paid the full balance or continued paying each month until the debt was paid off

Created with Lunacy

Settling your debt may improve your chances of getting future credit


Created with Lunacy

Your credit file will show that you have partially settled the debt i.e. that you have paid back less than the total amount owing. This may affect your ability to obtain credit

Created with Lunacy

If the debt has already defaulted the default will remain on your credit for 6 years from the date it was registered, even after the debt has been settled

Created with Lunacy

Your creditors do not have to accept the partial settlement offer

During the time that you are on the plan we will ask you not to take out any further credit. ‘Further credit’ includes the continued use of revolving credit facilities such as credit cards, catalogues or store cards. If you do, your creditors are within their rights to refuse a reduced repayment offer and will probably request full contractual payments (i.e. the original amount/rate of payment that you agreed to when you signed the agreement) towards the debt.

Frequently asked questions


We charge a one-off fee for negotiating with your creditors to settle your debts. The fee is calculated as 25% of the saving that we negotiate for you. By using this method it ensures that you only pay us if we manage to agree reduced settlements for you and save you money.

Because we only charge you a % of the saving, this cannot be calculated until we have received settlement figures from all of your creditors and have agreed with you which ones to pay. This means that we cannot agree the specific cost to you at the beginning of the process, so you need to bear this in mind when deciding whether to proceed with the service.

Below are some illustrations of settlements with their associated fees:

Total non-priority debt amount: £8,000
Number of creditors 6
Lump Sum available £6,000
Total value of agreed settlements: £5,000
Total saving: £3,000
Settlement fee: £750.00
Total Payable by you £5,750

In this example, it was possible to settle all of the debts.

Total non-priority debt amount: £6,000
Number of creditors 3
Lump Sum available £6,000
Total value of agreed settlements: £6,000
Total saving: £0.00
Settlement fee: £0.00
Total Payable by you £6,000

In this example, it was not possible to negotiate any saving

Total non-priority debt amount: £5,500
Number of creditors 3
Lump Sum available £2,000
Creditor 1 Balance: £820.00
Creditor 1 Settlement: £500.00
Creditor 2 Balance: £1,550
Creditor 2 Settlement: £1,200
Creditor 3 Balance: £3,000
Creditor 3 Settlement: £3,000
Saving (for those that are possible to settle): £670.00
Settlement fee: £167.50
Total Payable by you £1,867.50

In this example, it was only possible to settle Creditor 1 and Creditor 2


We will calculate suitable offers to your creditors
We will negotiate with your creditors, both verbally and in writing, on your behalf to get the best deal for you
We will send you a written proposal showing how we intend to distribute your money
We will distribute the funds and send a confirmation letter to all relevant creditors

By settling your debt, your creditors will need to write off a portion of your debt (the difference between your balance and the partial settlement that we agree). This will show on your credit file, usually alongside a marker that says ‘partial settlement’, so lenders will be able to see that you have not paid the debt in full. This on its own may not prevent you from getting credit, but some lenders may have additional checks in place where this flag is identified.

If the account has already defaulted, settling it will not remove the default. This will stay on your credit file for 6 years from the date that the default was issued.


Once the debt has been settled by mutual agreement with the creditors, they should not pursue you for any remaining sums. The remainder of the debt will usually be written off.


Yes – you can do this on your own and free of charge. You are perfectly entitled to approach your creditors directly to negotiate partial settlement figures. We do appreciate, however, that this can be a daunting prospect which is why we offer this service.


No – they don’t, but there are many reasons why a creditor may consider a lump sum in settlement of a debt. For example, if you’ve fallen behind with your payments, or if you’re making reduced payments and it will take a long time to pay off the debt, the creditors may prefer to have a lump sum now rather than relying on a low return for a very long time.
If your creditors are not prepared to accept a reduced settlement, we can talk you through your options. If you have the money available after settling other debts you may want to pay the debt in full or, alternatively, you may wish to continue paying a monthly instalment directly to the firm. If you can’t get the reduction you need to settle all of your debts and you won’t be able to meet the repayments moving forwards, you may be able to consider a single payment IVA.


Get Debt Advice Now