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Debt Write-Off

4th April 2023 · 3 minute read

Published by The Real Debt Guy

  • Partial settlement
  • Debt Settlement
  • Settling Debt
  • Clearing Debt

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Partial Settlement Explained – Can it help you?

You’ve received an offer to settle your debt with a creditor or debt collector. The offer looks attractive, they’ve decided to remove 70% off the debt. You read through the letter, it states that they’re willing to accept 30% of the balance as a “Partial Settlement” and write off the remaining.

But what is a Partial Settlement?

Not in the mood to read? We got you covered. Listen instead by clicking YouTube link at the bottom of the page.

Let’s hit the brakes for a minute as we have to make an important point here. Don’t even think of settling without first reading our article “Discount debt offer: Make sure the price is right”. This article will give you an understanding of what may be achievable in terms of a debt reduction.

Where were now. Ah yes...the partial settlement.

What is a Partial Settlement?

The best way to describe it, is settling a debt for less than the total amount owed on the debt.

Example: The amount owed on the debt is £10,000 and the creditor or debt collector agrees to accept £2,000 in order to satisfy the debt.

You’ve not paid the full amount, so it is not classed as a full settlement. You’ve only paid part of the amount hence the term “Partial Settlement”.

How does it help you?

Now that’s a very good question and it’s really depends on how old your debt is. What do we mean by that?

Well, any negative mark, relating to the debt, on your credit file comes off 6 years after it was registered.

Keeping it simple, if you had a default registered on your credit file relating to a debt over 6 years ago, it will no longer show up on your credit file. Meaning it’s as if it doesn't exist.

Not having it showing, automatically helps your credit rating.

Even though the debt is no longer showing on your credit file it still exists. Which is why you may still receive letters regarding it.

However, in a scenario where the debt is still showing on your credit file and you decide to do a Partial Settlement, it’s really down to how the lender sees it.

Is it glass half full? Meaning, even though a default is on your credit file, you reached some sort of agreement to settle even though it’s a reduced amount.

Is it glass half empty? You never paid the full amount back, so that might be a risk for the lender.

Don't forget to read The Real Debt Guy's final thoughts below!

The information in this article is considered to be true and correct at the date of publication.

The Real Debt Guy's final thoughts.

We find that most people who want to settle a debt, do so because the debt just existing affects them mentally and/or emotionally, and are afraid of any repercussions.

Having a calm mind and knowing the facts are very important when making decisions like this. It’s important to know why you are choosing to do a Partial Settlement.

If it’s to help your credit file, you may not know if it will and how much until after you’ve settled. There’s a chance it may not help it at all.

If it’s to give you mental relief, be sure that taking this action will give you this, and it’s not just a costly temporary relief which will ultimately be replaced with something else to worry about.

Focusing on mindset will not just help you with this situation, it will help you in many aspects of your life.

We have an article in our Mindfulness section to help you with a situation like this - Taking control of your emotions and your debt.” The Real Debt Guy has you covered.

Simplifying complicated matters.

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