You can use gifts to make settlement offers to debts you are in arrears with.
These offers are often called called “Full and Final offers” and F&Fs for short. They are explained in detail here.
Using a gift of money to do this is almost always a good idea!
In a F&F that 2k could potentially be used to clear £3,000, £4,000 or more of debt, so it can be an excellent use of the money. The same would apply if you had a bonus from work or inherited some money.
There are a few things to think about, so let’s explore possible situations.
Do you have any priority debts?
Priority debts such as rent or mortgage arrears, council tax arrears, utility debts etc usually have to be handled outside a DMP.
You can’t make a full and final settlement on a priority debt – the creditor knows you are going to have to repay it in full, as a result they are so unlikely to accept an offer. It’s not worth bothering to try for this.
Clearing the priority debt is often a good idea even if you have an arrangement set up to pay it slowly.. Perhaps you need to move to a larger house but the Housing Association won’t let you move because you have rent arrears – that would be a good reason to use the gift to pay the rent arrears. Also you may just sleep better at night if the rent or mortgage arrears are repaid!
What sort of F&F offer should you make?
This depends largely on how long you have been in a DMP for and how large the repayments you are making each month are:
- if your DMP has been running a long time and you are making pretty low or even token payments, your creditors may be happy to accept 25p in the £ or even less. Here the debt will normally have been defaulted and sold on to a debt collector – debt collectors are often easier to negotiate partial settlements with than the original creditor.
- if your DMP has only been running for a few months after you lost your job, you are fit and aged 30, then your creditors are probably not going to settle for less than 80% and they may refuse any offer.
- if you can supply medical evidence to suggest you won’t be able to return to work for a long while, if at all, they are also more likely to accept a low offer. This could be a copy of a hospital appointment letter say, it doesn’t have to be a specially written letter that your GP may charge you to write.
- if all the debts will be repaid in full in another year, then any low offer is likely to be rejected because they will get all their money by waiting a bit.
Should you make the same offer to all your creditors?
DMP firms often seem to say you have to divide the money between all your creditors.
But if your total debts are £15,000 and you have a gift of £2000, that isn’t enough to make offers to all your creditors. So it’s much better to use that gift of £2,000 to clear £5,000 of debt owned by a couple of creditors.
This isn’t treating the other creditors unfairly! After these settlements, the remaining creditors will be getting more money each month. And often you are only being offered the money if it can write off a lot of debt, so it would be silly to turn it down.
I suggest if you only have enough to make offers to a few of your creditors, then you just contact them directly, not trying to go through your DMP firm.
Is the debt very old?
If the debt is a credit card, catalogue or a loan and it is pretty old and it has been sold to a debt collector, read Making a settlement offer on old debts – ask for the CCA first! as that gives you another way to make the most of that gift.
A final thought about taking a gift
Do make sure your dad or your sister can actually afford it. Don’t let someone else get into money problems trying to help you out…
What to do if a F&F is rejected
Problems about very old student loans
How to add a Notice of Correction to credit files
Lily says
I am considering taking a job at a much reduced salary so that I can afford to pay only a token payment to my creditors in the hope that more will accept ‘my’ full and final settlement offer (I have been in a DMP for nearly ten years). Starting again may then actually be possible, as I would be by taking this job, otherwise I still have another 22 years to go!
Debt Camel says
This sounds unusual.
Hi Lily, if you have been in a DMP for 10 years with 22 to go, you must be making really quite low payments already, so why won’t your creditors accept a F&F offer?
Do you have a property with equity? If not, you should consider bankruptcy instead.
If you do, then this may be the reason they won’t accept a F&F and dropping your DMP payment even more won’t make that much difference. You may need to either remortgage or sell…
Lily says
Some creditors accepted, one wants repayment in full and the others will accept a slightly higher F&F offer. Many have said how good they think my monthly payments are.
Personal bankruptcy is awful apparently, effects/impact far worse that someone going bankrupt because their associated business has failed and I rent.
Debt Camel says
If a DMP will take 20+ years and you are renting, then you should almost certainly be looking at bankruptcy. if you owe more than 15k and a Debt Relief Order if you owe less. Read my pages of information about personal bankruptcy – it almost certainly won’t be nearly as bad as you think https://debtcamel.co.uk/debt-options/bankruptcy/. Then think about talking to someone like National Debtline about your situation and your different options.
kye says
I have debts at approx. £6000 and am thinking about getting some money from family to offer a f&f. It has been 5 years since I have had contact and less than a year until the debts will become statue barred so worrying about CCJ action. I am thinking of offering a 30-40% offer to the creditors but unsure whether to just try to wait out the 6 year period from default date. Also whether they may accept this percentage due to only being 30.
Sara (Debt Camel) says
Hi Kye, you are right to be worried about possible CCJ action in the next year, see https://debtcamel.co.uk/no-calls-or-letters-about-debt/. If you can produce an Income & Expenditure sheet that show you could only afford a minimal monthly payment, then the chances are they will accept 30% as it is coming from family.
Waiting out the 6 years and having the money ready to offer (or rather having the family member ready to offer) if you are contacted by a creditor is a reasonable option, but you do need to be sure the creditors have your correct address. You don’t want a creditor to take you to court for a CCJ using an old address and you not finding out until later.
Jane says
DebtCamel,
I have £24k credit card / overdraft debt. I’m on a Token Payment Plan with StepChange, have been paying £1 pm for 6 months, but have missed at least 8 months of payments. All my creditors have now frozen the interest. I have no CCJ’s. I own my house outright, worth £200k. My sole income comes from live-in lodgers = £850pm. I’m registered self-employed, my income from that has dwindled to virtually zero over recent years, in part due to longterm depression. I’m divorced, aged 40. I will not be seeking any credit / a mortgage in the foreseeable future. I don’t want to sell my house.
A family friend is offering to help me out with a lump sum, so I can try to do an F&F, but wants me to start with a low offer. I realise it depends on what the family friend can afford, but roughly what % would you recommend I start offering my creditors, please?
I will supply an income and expenditure sheet to creditors. I have read that it may be helpful for the family friend to make the payments directly to the creditors who accept an offer.
Many thanks for any suggestions, and thank you so much for this incredible site.
Sara (Debt Camel) says
If the debts are all still with the original creditors and as you have so much equity it’s pretty unlikely a low offer will be accepted, see https://debtcamel.co.uk/full-final-settlement-rejected/. I would probably start at 50%, but they may well not be interested in that.
Jane says
Thank you so much for your speedy reply.
Hilary says
Hi Sara
Following redundancy I have been in a DMP for 6 years with VIncent Bond. I have paid off about half the debt (£20k) . Vincent Bind have now announced that they will no longer run debt management plans and I have to find an alternative arrangement. A relative will give me around £12k for this purpose, but this only equates to 60 percent of the remaining debt. How can I best approach them to accept this amount, do you think it is reasonable (two of the debts are with the original lenders and three have been sold on) Thanks
Sara (Debt Camel) says
60% sounds a good offer, i would hope most of your creditors will accept it and they may all do!
You need to write to them and explain that your current debts are now 20k (list them), a relative has offered you 12k if it can be to settle your debts (enclose a letter / email from your relative saying this) so you are offering them £x in full and final settlement of their debt.
See https://debtcamel.co.uk/debt-options/less-common/full-final/ for more information
Nicky says
Hi.
My husband and I have been on a token payment plan for the past year with debts accruing £80,000. We made a bad business choice and it has resulted in commitment to a business that is not turning a profit. My husband has returned to full time work and his wage covers our day to day living and I manage the business trying to prevent us from falling into debt with that as well.
We have now managed to sell our property and should end up with a lump sum of about £25000, approx 30% of our debt.
Is it likely that our creditors will accept this as full and final payment?
Nicky
Sara (Debt Camel) says
My guess is that at least some of them may… However from what you have said, I am concerned about the business you are running. If this is not making a profit, it may be better for you to exit it and deal with any debta resulting from that along with your other ones, not use all the money you have on your current debts?
Another option would be for you to consider a “single payment IVA” – that would be binding on all your creditors if a majority of them vote for it. That would have the advanatge that it would sort out all your creditors, but the disadvantage that you would have an insolvency market on your credit records for 6 years.
Nicky says
Hi Sara.
Thank you for your prompt response.
We are tied into a shop lease that the landlord will not allow us to leave before the lease runs out. I am looking at various options including asking an agent to find another tenant but in the meantime we have to continue to run it as a business to pay the rent and invoices. I would love to walk away from it but I don’t want to risk the landlord taking me to court for rent arrears.
I am pleased to know that our creditors may accept 30% as full and final payment.
Kind Regards,
Nicky.
gordon moore says
I am in the final year of my IVA and have been fiven a figure of just under £4000 to finish my IVA. A relative is willing to give me the money but is not willing to say it’s a gift for tax reasons, but is happily willing to give the money to my wife and then have her gift it to me to pay off the IVA, can we do this? Does the relative have to state that it is a gift?
Thanks
Gordon
Sara (Debt Camel) says
Hi Gordon, I suggest you read https://debtcamel.co.uk/iva-settlement/ which looks at the IVA situation in more detail.
I assume your wife doesn’t also have an IVA. Is 4k the amount that the rest of your payments add up to? Do you have a house with equity?
Acee says
Hi Sara
I’ve got some money back from payday loan refunds. I’ve got about £1500 spare from this so I’m looking to offer F&F to a few of the payday loans I owe but have no idea what to offer. I owe Satsuma 1k Lending Stream £600 and a few others around £300 I’m paying them all back via DMP until Jan 2019. What would be a realistic offer 50%? I’ve also got irresponsible lending complaints in against a few should I not offer these a F&F settlement will it affect my complaint? Need to make the F&F worth my while but don’t want to offer something unrealistic.
Sara (Debt Camel) says
How long has your DMP been going? Are there any other loans in it apart from payday loans? Your bets use for “spare” money has to be priority debts… any rent arrears, council tax arrears, logbook or guarantor loans? Also are there any expensive loans not included in your DMP?
Acee says
Decided to offer Likely Loans £1000 on a £3500 loan, been paying reduced payments for 12 of the 14 months I’ve had the loan and will take another 21 months to pay in full so hoping they are sick of me and just accept it. I can stretch to £1500 but gone in with a low offer first. If they accept it will knock 4 months off my debt free date from Jan 2019 to September 2018 so fingers crossed.
Acee says
DMP only being going a few months – I’ve got a loan with Likely Loans which I’m paying back £170 per month via DMP and still have around 3.5k on that been paying reduced payments for around a year on that debt before I set up my DMP so I think they may be happier to accept a F&F. The only debts in my DMP that are not loans are my bank overdraft of £2900 and Vanquis credit card £1500 and I don’t have any other debts other than those on my DMP so I’m not sure what will be the best use of £1500 so your opinion would be greatly appreciated.
Acee says
Not huge number but owed Lending Stream £595 its with debt collection agency Credit resource solutions they have accepted a f&f of £300 a saving of £295 and almost 50% so I’m happy with that.
jason says
Hi, I’m currently on a DMP I have 8 creditors with a total amount of £32000 paying £62 a month between them a friend has offered to help me out with a lump sum of £8000 as a F&F settlement. would this possible as 2 of the debts are joint with my ex-wife and she is in an IVA with them both.
Thanks in advance Jason.
Sara (Debt Camel) says
Whether your creditors will accept 25p in the pound depends on how long your DMP has been running for amongst other things. It’s certainly orth a try after a couple of years. Enclose an income And expenditure sheet (to prove you can’t increase your monthly payments) and also point out in you letter if you are renting so you don’t have a house with equity.
There is no reason why the debts in an IVA can’t be included in your Full and Final offer. If one of these creditors rejects your offer, it’s probably worth going back to them an asking if they will accept your offered amount in settlement of half of the debt and remove your name from the debt … this is more complicated so I wouldn’t suggest this at the start.
Jason says
I have been on the dmp for 3yrs, I do own my house but there is not much equity in it. I can send an expenditure sheet no problem as my dmp is with stepchange.
Sara (Debt Camel) says
Good luck – let us know how you get on?
Debbie says
Hi, Sara and everyone reading this,
Just wanted to let you all know that after some fantastic advice from debt camel I have finally, all but one creditor, managed to secure Full and final settlements with my creditors with the help of my parents. I had a total debt of almost £20,000 and managed to settle for less than £6,000.
the largest was for £15,000 and they accepted £3,500 and two more smaller debts as well. that was with Cabot who I thought was the one that would give me problems. the smaller ones were the ones that were the hardest to settle.
I wanted to share this good news as a few months ago I was really depressed and found this site. I have followed Sara’s advice step by step and now I’m almost debt free, I could of not done this without debt camels help. but the main thing is for you all to know that there is a way out of debt and I’m proof of that. don’t let it rule your life, have faith, they are not all monster and most will be happy to help if you show your trying.
thank you again Sara.
Keep up your good work.
lorraine legge says
Hi debbie
God that’s fantastic news. What template letter did you use and where did you get it from. i’m in the process of being able to offer a settlement and would be great if I could have a sample letter to use there seems to be so many out there i dont know which one to use.
Sara (Debt Camel) says
See https://debtcamel.co.uk/debt-options/less-common/full-final/ which has a link to the National Debtline Letter I recommend and a couple of other things you may want to add.
Debbie says
It was one off this site, Sara will lead you in the right direction, I wish you best of luck. x
Mark says
Hi, hope you don’t mind me hijacking this thread. I’m approx 24k in debt and paying £191 per month through step change. I have been paying this for a full year after falling Ill and receiving reduced salary. This is due to run for another 10 years. I am 50 next month and have been told my family are going to help me with a gift. My debts are with Ikano bank, Barclaycard and PRA (sold by Nat West). I have read that Barclaycard & PRA don’t accept low offers. Any advice inn what Should offer?
Sara (Debt Camel) says
Can you say how much your monthly DMP payment is? Also do you have a house with equity?
Mark says
Monthly Dmp is £191 And I rent. I have no assets as such.
I have been told today that ikano will only accept full payment (£10 pm on £1500) Barclays won’t accept £4k (£75 pm on £10.5k)
Sara (Debt Camel) says
So your options now may be to carry on with the current DMP payments for another couple of years – by which time Ikano and Barclays will probably have sold your debts, and make a new set of full and final setlement offers – or to consider bankruptcy now.
If you go bankrupt now, you will have to make monthly payments for 3 years. The gift from a family member could pay your up front bankruptcy fees and they could also help you with possibly acting as a gurarantor if you need to move and rent somewhere else.
Why don’t you talk to Stepchange about bankruptcy and see what they say?
As you are renting, there is probably no advanatge to you considering an IVA, another form of insolvency where you have to make payments for 5 years and which can fail if your income falls. In bankruptcy if your income drops, your monthly payments just drop, possibly to zero.
Mark says
Thanks, I will ask them. They have just told me that DMP is my best option but I didn’t ask about bankruptcy. It scares me a bit but I will look at it.
Sara (Debt Camel) says
In the end it may come down to whether you feel your circumstances are more likley to improve – in which case the 10 yeasr DMP would get shorter – or get worse.
Melrose dreams says
Hell Sara
just wanted to ask a few questions about F&F, as I have read other forums and looking for instructions in order not to mess up.
1) Some people talk about a F&F offer in instalments, is such a thing possible, like spreading the reduced amount that the creditor would potentially accept over a few months.
2) Does the money have to come from a third party? One relative wants to offer it in cash, in that case i would be putting this money on my bank account and would possibly look like my money instead
3) related to point 2, how is the payment usually done, check or transfer, debit card etc?
Sorry I`m new to this and don`t want to mess up with the details
Sara (Debt Camel) says
Some lender will make an offer to you over a few months. If you are making an offer to them, many will expect the money to be paid in a lump sum. But you can offer anything you want, it’s up to the lender if they will accept it.
It helps to say where the money is coming from. If the lender thinks it’s your own savings, they may be thinking you could just pay them a lot more each month. So saying it was a PPI claim or an inheritance or it’s coming from your sister explains how you can offer this money.
I don’t think how it is paid matters. Ask the lender.
Freddie’s human says
Hi Sara
I’ve got approx £20k left to pay on DMP I’ve had for 11 years. Paying £300 a month at the moment. I have the opportunity to transfer a small pension and the lump sump would give me enough cash to offer 60% to partly settle the debts. The DMP company have written to creditors asking for settlement figures but the first 4 have offered 10% discount. As it will cost me quite a lot of money to transfer pension, when I offset these discounts against that it’s not worth it.
As I have declined these offer my case has been transferred back to the DMP team by Settlements.
These debts are many years old. After reading some posts on your site, I wonder if it’s worth apply for copies of the original agreements and tryin to negotiate settlement figures myself.
Thanks for your help
Sara (Debt Camel) says
What sort of debts were they – loans, credit cards, overdrafts, utility debts?
Freddie’s human says
All credit card, Egg, Barclaycard, m&s
Thanks
Sara (Debt Camel) says
Then I think it’s well worth asking the debt collectors that know own the debts to produce the CCA agreement. See https://debtcamel.co.uk/ask-cca-agreement-for-debt/ for how to do this. If they can’t you can tell your DMP firm to stop paying, not need to try to get them to settle at a low amount, keep your money for settling the ones where they can produce the CCA!
Freddie’s human says
Thanks very much for your help
I’ll give that a go. Nothing ventured…
This is a great website btw, found lots of interesting information on here
Jill says
Hi i have agreed a full and final settlement with Tesco. I have been having difficulty receiving post from them (multiple staff have confirmed a letter was sent but we have an unusual address and post often doesn’t reach us). They have agreed to let me record the conversation when i call to pay the settlement. They will give the staff members name and department, verbally confirm the details of the settlement and that the remaining debt will not be pursued or sold on and that my credit file will be updated with a partial settlement marker and the account will then show as closed. If in the future they try to pursue me for the debt would the voice recording be enough of a defence? Thanks
Sara (Debt Camel) says
Having gone to the trouble of organising this for you, I would be surprised if you later have a problem with this.
stuart says
Myself and my wife have combined unsecured debts of £25,000, we have been on a stepchange DMP for 12 months, paying roughly £512 to £705, depending if my bills have went up due to inflation, Wife is selling her car for £2600 and i will get an inheritance of £3300 shortly, is that enough for f&f settlement offer. My fear id not all creditors will accept one and if I get some to accept, then the monthly payments will then be spilt between less creditors thats left, 12 in total and hence the payment they get will be worth more to them and it may match the original min payments that existed before we went on a dmp. If that happens can the DMP be cancelled by the remaining creditors and then back to normal min payments, (but they will restart interest probably) like a regular customer!!
some have sold on the debt, some havent at present.
Sara (Debt Camel) says
so if I assume you have paid off an average of £600 a month a dn that all interest is frozen on the debts, then there is about £17500 left.
£6800 may be a bit little to be accepted after only a year, especially for debts that haven’t been sold to a debt collector.
have the debt that have not been sold on marked ytour credit record as defaulted?
stuart says
it was originally £32,000, we have made various diff payments over last 12 months, 8 out of 12 debts have been sold on. all the interest is currently frozen. Another thing is, if some of them accept a F and F, leaving some left to still pay, then my worry is then i will be bale to contribute more to the debts that are left and if these havent been sold on, then my monthly payment may then be roughly the correct min amount for regular non DMP. Then could theses creditors take me off my DMP and put be back to paying min payment with interest.I t was the interest that caused the problem.
Think all our debts have been marked as defaulted as we missed more than 2 standard payments before the DMP. as per standard credit agreement.
Sara (Debt Camel) says
my worry is then i will be bale to contribute more to the debts that are left and if these havent been sold on, then my monthly payment may then be roughly the correct min amount for regular non DMP. Then could theses creditors take me off my DMP and put be back to paying min payment with interest.
It would be very rare for a creditor to decide to do this after so long especially if they have defaulted the debt. You can check on your credit record for this. I wouldn’t worry about it.
stuart says
I had to stepchange about 8 months ago, I said surely the smallest debts will be paid off faster in my DMP then the remainder of the monthly instalments will generate more cash to the remaining bigger debts and then they can potentially move me back to a “regular customer” and pay interest as its now at least min payment, stepchange said that will probably be in the last few months of my dmp and the creditors do have the right to do it, but may not do it though.
Sara (Debt Camel) says
yes. It’s very unlikely.
Wtf says
You do realise that all of these questions and replies are being sent to complete strangers who have nothing to do with debt camel or whatever?!
Sara (Debt Camel) says
You left a comment on this article many years ago. If you ticked thr box to subscribe to comments you will still get emails… Emails all have an unsubscribe button if you no longer want them.