Everything You Need to Know About Employee Full and Final Settlement Letter Format

Full and final settlements (also referred to as ‘partial settlements’ or ‘short settlements’) are once you offer your creditors a payment of cash which is a smaller amount than the entirety of what you owe. They accept this amount as you are clearing your debts and comply with writing off the remainder of the debt.

It’s not only the one that owes the cash who can invite a settlement figure. Sometimes, if you default on a debt, the creditor can write to you and suggest that you simply pay off your debt this way.

You will only be ready to make a suggestion like this if you’ve got a payment of cash available to place towards your debts and beat one go. Also, you would possibly get this payment through inheritance, redundancy, selling something or maybe through a PPI reclaim. It’s also sometimes possible to form a suggestion to only one among your creditors, in order that you’ll at a minimum be ready to cross one debt off your list and specialise in repaying the others monthly instead.

Table of Content

1. What exactly is a full and final settlement offer?
2. What to consider when writing a debt settlement proposal letter
3. How do you create a full and final offer?
4. How and for whom do you write a full and final settlement letter?
5. How can you decide how much to offer creditors in a full and final settlement letter? 
6. Will it affect your credit score?
7. Full and Final Settlement Letter Format
8. Conclusion 

1. What exactly is a full and final settlement offer?

A full and final settlement offer may be a proposed payment from a debtor to a creditor to clear the debt. The offers are going to be below the entire value for the cash owed but are going to be paid in one lump payment, which is attractive to creditors because they don’t need to wait to urge most of the cash . The settlement offer will save the debtor money and stop them from having to pay interest on an impressive amount for several months or maybe years.

An example would offer to pay £600 in one payment instead of paying £80 per month (+ interest) for ten months of a debt worth £800. you would possibly prefer to do that because your financial situation has improved – also on economize .

Note, it’ll remain on your credit file for 6 years that you simply never paid the debt back fully .

2.What to consider when writing a debt settlement proposal letter

It’s especially important that you set about this within the right way. This suggests sending a written letter explaining how you would like to settle your debt, what proportion you’re offering to pay and when this will be paid by.

Your debt settlement proposal letter must be formal and clearly state your intentions, also as what you expect from your creditors. you ought to also include all the key information your creditor will got to locate your account on their system, which includes:

• Your full name used on the account
• Your full address
• All account numbers or reference numbers that are linked or related to your account

Creditors should be ready to use these to seek out all of your relevant information and ensure who you’re once they receive your debt settlement proposal.

3. How do you create a full and final offer?

You can make a full and final Notice offer on to the creditors yourself.

If you’ve got a payment but several creditors you would like to clear debts with, it’s sometimes possible to form full and final offers on a professional rata basis. This suggests that the creditor that’s owed the foremost money gets the most important offer then on then forth.

You don’t need to speak to the creditors yourself though – you’ll get a corporation that specialises during this quiet negotiation to try to do the work for you. If you’re already on a debt solution with an answer provider, they’ll also provide a service where they negotiate settlement figures together with your creditors. You’ll need to pay a fee for this service but you’ll sometimes enjoy the negotiating experience and good relationships that these companies have built up with the creditors over the years.

4. How and for whom do you write a final settlement letter?

Usually the settlement offers should be written specifically for your creditor in order to explain your circumstances clearly. Some people find it difficult to seek out the proper words or explain themselves easily especially in a difficult situation. That’s why we have created an example of free debt settlement offer letter templates which could be found in section (6) of this blog. Feel free to refer to it when you create your own final settlement letter. 

5. How can you decide how much to offer creditors in a full and final settlement letter? 

Here may be a potential way of understanding what proportion to supply creditors fully settlement:

• Multiply the payment amount by each debt you owe
• Divide this by the quantity you owe all creditors
• This equates to the quantity you ought to offer that specific creditor

Let us say you’ve got a payment of £2,500 and owe £2,000 to your MasterCard company, £1,500 to your bank and £500 to a payday loan company. this is often how you ought to compute what proportion to supply creditors fully settlement:

• (2,500 x 2,000) ÷ 4,000 = £1,250 for the MasterCard company
• (2,500 x 1,500) ÷ 4,000 = £937.50 for the bank
• (2,500 x 500) ÷ 4,000 = £312.50 for the payday loan company

It is an honest idea to keep a note of what proportion you owe and what you’re getting to offer each creditor within the sort of a table. You’ll also want to feature this table in your debt settlement proposal letter, so each creditor will easily be ready to determine what proportion of your payment they’re going to be receiving.

6. Will it affect your credit score?

Before you consider using and writing a Full and Final Settlement Letter you should understand how it could affect your credit score. 

Usually when you settle your debt in this way it is likely that it  will affect your credit history. Sometimes this type of agreement is marked on your file as ‘partially settled’ and sometimes it’s marked as ‘settled.’ This suggests companies who run credit checks on you’ll be ready to see that you simply haven’t paid the debt fully. This will sometimes affect your ability to get credit at a competitive rate of interest or get a service sort of a mobile contract. Having said that, whether a ‘partial settlement’ affects your ability to borrow really just depends on the policies of the precise lender that you simply approach.

Defaults stay in your credit history for a minimum of six years so if you’ve defaulted on the debt that you’ve settled, you’ll get to wait a short time before it disappears. Don’t worry though, making a full and final settlement won’t extend the time that the default stays on your file – it’ll still drop off when it has been thanks to. If a partial settlement is marked on your file once you haven’t received a default then this may stay there for 6 years.

But what happens if you defaulted on the debt and it’s already dropped off your record? Well, the great news is that settling won’t ‘bring back’ an old default. Once it’s been on your credit history for 6 years, it’ll drop off whether you agree on the debt or not.

If you’re on a debt solution, you’ll ask your solution provider for more advice about full and final settlements. If you’re still trying to find the simplest thanks to tackling your debts you’ll get in-tuned with one among our advisors using the choices on the left. they’re going to be ready to tell you which of the solutions is best for your circumstances.

7. Full and Final Settlement Letter Format

[Your name and address]

[Name of creditor organisation]

[Written creditor address]

Regarding Case number: [your case number]

Account Number: [account which is linked to your debt] 

Dear Sir or Madam,

I am writing about the money which you are claiming on the above account and details 

And I can confirm that I will be unable to pay the money which I owe in full.

[Explain your current circumstances that prevent you from repaying this debt in full to ensure that creditor understand your current situation] 

However, I can raise £[enter the amount which you can afford to pay] (required) and I want to offer this as a full and final settlement of the account. I am making this offer on the clear understanding that, if you accept it, neither you nor any associate company will take any other action to collect or enforce this debt in any way and that I will be released from any liability.

If you accept this offer, please confirm that you will mark my credit reference agency file to show that the above account has been paid and closed.

I can pay the amount I have offered within[enter the number of days] (required) of receiving your written agreement of this offer.

Please give me details of how I can pay.

I look forward to hearing from you.

Yours sincerely

[Your full name]

Template 8. Full and Final Settlement Agreement for Employment Termination

[Your Name]

[Your Address]

[City, State, ZIP]

[Email Address]

[Phone Number]

[Date]

[Recipient’s Name]

[Recipient’s Address]

[City, State, ZIP]

Subject: Full and Final Settlement Agreement

Dear [Recipient’s Name],

This Full and Final Settlement Agreement (“Agreement”) is entered into between [Your Name] (“Employee”) and [Recipient’s Name] (“Employer”) to settle all matters and claims arising from the termination of the Employee’s employment.

1. Termination:

 The Employee’s employment with the Employer was terminated on [Termination Date].

2. Settlement Amount:

In consideration of the full and final settlement, the Employer agrees to pay the Employee the sum of [Specify the settlement amount in words and figures], inclusive of all outstanding wages, accrued vacation leave, and any other entitlements.

3. Payment Terms:

   The settlement amount shall be paid to the Employee in [Specify the payment method, such as check or bank transfer] within [Specify the timeline for payment, e.g., 10 business days] of the execution of this Agreement.

4. Release of Claims:

   Upon receipt of the settlement amount, the Employee hereby releases and discharges the Employer, its officers, employees, agents, successors, and assigns from any and all claims, demands, actions, liabilities, or causes of action, whether known or unknown, arising from the Employee’s employment or its termination.

5. Confidentiality:

   Both parties agree to keep the terms and conditions of this Agreement confidential, except as required by law or with the express written consent of the other party.

6. Entire Agreement:

   This Agreement constitutes the entire agreement between the parties regarding the settlement of all matters related to the Employee’s employment and its termination and supersedes any previous agreements or understandings, whether written or verbal.

7. Governing Law and Jurisdiction:

   This Agreement shall be governed by and construed in accordance with the laws of [Specify the governing jurisdiction]. Any disputes arising out of or in connection with this Agreement shall be subject to the exclusive jurisdiction of the courts in [Specify the jurisdiction].

Please indicate your acceptance of the terms and conditions of this Full and Final Settlement Agreement by signing and returning a copy of this letter.

Sincerely,

[Your Name]

[Your Signature]

[Recipient’s Name]

[Recipient’s Signature]

Template 9: Full and Final Settlement Agreement for Debt

[Your Name]

[Your Address]

[City, State, ZIP]

[Email Address]

[Phone Number]

[Date]

[Recipient’s Name]

[Recipient’s Address]

[City, State, ZIP]

Subject: Full and Final Settlement Agreement

Dear [Recipient’s Name],

This Full and Final Settlement Agreement (“Agreement”) is entered into between [Your Name] (“Debtor”) and [Recipient’s Name] (“Creditor”) to settle all outstanding debts and obligations between the parties.

1. Debts and Obligations:

   The Debtor acknowledges and agrees that the following debts and obligations are owed to the Creditor:

   – [Specify the nature and amount of each debt or obligation]

2. Settlement Amount:

   In consideration of the full and final settlement, the Debtor agrees to pay the Creditor the sum of [Specify the settlement amount in words and figures] as a final settlement of all debts and obligations.

3. Payment Terms:

   The settlement amount shall be paid to the Creditor in [Specify the payment method, such as check or bank transfer] within [Specify the timeline for payment, e.g., 30 days] of the execution of this Agreement

4. Release of Claims:

   Upon receipt of the settlement amount, the Creditor hereby releases and discharges the Debtor from any and all debts, claims, demands, actions, liabilities, or causes of action, whether known or unknown, arising from the debts and obligations.

5. Confidentiality:

   Both parties agree to keep the terms and conditions of this Agreement confidential, except as required by law or with the express written consent of the other party.

6. Entire Agreement:

   This Agreement constitutes the entire agreement between the parties regarding the settlement of all debts and obligations and supersedes any previous agreements or understandings, whether written or verbal.

7. Governing Law and Jurisdiction:

   This Agreement shall be governed by and construed in accordance with the laws of [Specify the governing jurisdiction]. Any disputes arising out of or in connection with this Agreement shall be subject to the exclusive jurisdiction of the courts in [Specify the jurisdiction].

Please indicate your acceptance of the terms and conditions of this Full and Final Settlement Agreement by signing and returning a copy of this letter.

Sincerely,

[Your Name]

[Your Signature]

[Recipient’s Name]

[Recipient’s Signature]

10. Conclusion 

If you want any support or help on how much to offer creditors in a full and final settlement letter, you can rely on qandle to help. Visit Qandle today and connect with like-minded HR professionals at the same time.

We could guide you through your other potential options. These could include a Debt Relief Order or Individual Voluntary Arrangement. 

For more information please request a consultation or you could always contact a member of our team today.