Debt Settlement Offers


A debt settlement offer (DSO) can be away of repaying your debt with a lump sum payment.

This could be an option for you if you owe money to a creditor but can repay a sum of money in one large payment.

What percentage should I offer to settle a debt?

It depends what you can afford, but if you’re making a settlement offer to multiple creditors, make sure you offer them the same percentage of your total debt.

What is a debt settlement offer?

A debt settlement offer is a way of repaying debt with a lump sum payment.

The companies you owe money to, also known as creditors, may sometimes refer to this type of debt solution as a full and final settlement, a partial settlement offer or a short settlement offer.

In a debt settlement offer a creditor less than the outstanding debts owed but you do commit to paying in full.

If creditors accept they agree that no further action will be taken to recover money owed.

How do debt settlement offers work?

You may find yourself considering a debt settlement offer for two reasons.

One, you’re in a position to make a full and final settlement offer to repay part of your remaining debt with one lump sum.

Alternatively, if you’ve been unable to manage monthly payments and are in arrears, your creditors may suggest you consider a debt settlement offer.

In simple terms, in a debt settlement offer you’ll offer a creditor a lump sum of money towards the debt you owe and your creditor will write off the remaining debt.

For example, if you owe £6,000 to a credit card company but have been unable to manage your monthly payments, a debt settlement offer would allow you a part of the credit card debt owed.

In this instance you could offer to make a partial settlement payment of £4,000 in a lump sum payment and in return the credit card company will write off the remaining balance.

You may wonder why creditors accept full and final settlement offers if debts are only partially settled. However, many creditors accept they may never see the total debt owed and agree that getting some of the debt you owe in a one off payment is better than you never paying the full balance anyway.

Can I use a debt settlement offer to settle debts with more than one creditor?

It’s possible to pay multiple creditors with a debt settlement offer as long as they all agree.

This is known as making a pro-rata offer and involved dividing the lump sum payment between the creditors in proportion to what you owe.

The process is similar to working out how much debt you’re able to repay to an individual creditor but you will be required to work out a settlement figure for each creditor.

It’s a simple calculation:

Multiply the lump sum amount by the exact individual debt owed to one creditor.

Divide this by the amount you owe to all your creditors.

The total is the amount you owe to each creditor.

Having a settled debt on your credit file can make it more difficult to access credit

What is considered a reasonable full and final settlement offer?

When considering debt settlement you may be wondering what is considered to be a reasonable offer.

Creditors are likely to accept your offer based on various factors, such as:

  • Total debt level (of unsecured debts)
  • Who you’re creditors are and how much debt they expect to be repaid
  • How much money you can offer as a lump sum payment

The reality is there’s no firm amount that a creditor is looking for when it comes to debt settlement.

Each creditor might look for different amounts to settle specific debts. Your credit card company might expect one payment, while a pay day loan company expects something different.

When settling debt in this way, however, you should always offer the same settlement offer amount to every creditor.

Will a debt settlement offer appear on my credit file?

Despite making an effort to pay part of your debt with one large lump sum, debt settlement offers will appear on your credit file.

When a creditor accepts a debt settlement offer it’s typically less than the outstanding balance owed. Even though the creditor agrees to settle the debt it is still classed as a partial settlement.

The payment will appear on your credit file as a partial settlement and in turn this will have a negative impact on your credit rating.

Having a settled debt on your credit file can make it more difficult to access credit, such as mortgages or credit cards, in the future.

How we helped Paige

It was literally the best decision of my life, and it has actually changed my life, cheesy as that sounds, it has changed my life.

Paige , IVA Customer

What happens if a debt settlement offer is rejected?

Sometimes creditors reject debt settlement offers. If this happens it’s important to to seek professional debt advice.

The longer you continue to struggle with monthly payments towards what you owe, the more money you’ll owe in the long term.

Debt advice companies will get to know your individual financial circumstances and explain the debt solutions available to you.

Debt solutions they may discuss include:

  • Individual Voluntary Arrangement (IVA)
  • Trust Deed
  • Debt Arrangement Scheme (DAS)
  • Debt Relief Order
  • Debt Management Plan

Any of the plans above, as well as other debt solutions they may discuss, can help you manage unsecured debt.

Where can I find advice about debt settlements?

If you’re interested in finding out more about debt settlement offers and if it’s the right debt solution for you, talk to Your Debt Expert.

Our team specialises in offer debt advice tailored to your individual financial circumstances and can help you with debt write off opportunities.

To find out how they can help you with free advice, call  0800 082 8086.

What are the advantages & disadvantages of debt settlement offers?


Settle debt quickly with a lump sum payment.

You can manage a debt settlement offer on your own. There's no need to involve insolvency practitioners to repay debt owed.

Write off a portion of your debt.

Unlike with other debt solutions, like an IVA, your name won't appear on a public insolvency register.


Companies you owe money to don't need to accept your settlement offer.

If you're repaying multiple creditors you will need to work out the outstanding debts owed to each and calculate your repayment.

Your debt will only be partially settled which will affect your credit rating.

Where can I get more advice on Debt Settlement Offers and other debt solutions?

To discuss your options and get the support you need to deal with your debt today, contact us now on 0800 082 8086 or click the button below to get started.