Full and final settlement terminology - does it need amending ?

sourcrates

Hi folks,

Been a few posts of late where long term DMP`ers, and others, have reached the stage of making settlement offers to some of there creditors.

There has been some confusion about exactly whats meant by a "full and final settlement offer", and how it should be marked on your credit file.

The very name itself "full and final settlement" tends to send the wrong message, as your not paying in full are you, your asking the creditor to accept a partial settlement payment, of less than the outstanding balance, to pay off the debt.

Likewise your credit file would reflect that, and be marked as a "partial settlement".

So my question is, do you think the terminology needs changing to make things clearer ?

Not just on these forums, but essentially across the board so the debt charities, National Debtline etc etc all use it too.

Be interesting to hear your thoughts.

somuchindebt

Yes, this is funny one. I am not sure about changing it even though I have been thinking about it a few times. I think it should be clear between debtor and creditor that this is full and final settlement even though agreed amount for it is less than the outstanding debt. I look at this that the particular agreement has been settled fully , ie no further chasing or selling debt. By making this payment both sides agree that their relationship is fully settled and it's final. However banks should have opportunity to mark the credit file in a way that reflects that. So they cannot mark it as debt was settled in full. So this creates misunderstanding. I don't know how this could be changed. May be the clue should be in the word "settlement" and maybe there is no need to add full and final, or maybe just final should be ok...

January2015

'Full' implies paying off the debt for the whole amount owed.
'Settlement' implies an official agreement intended to resolve the debt.

'Partial' implies part/incomplete payment

Therefore, to me anyway, it makes sense for the term to be 'Partial' and 'Settlement'

Just my opinion

somuchindebt

Yes, but if it's partial payment that's fine, but settlement needs to be final. I don't know what in legal term partial settlement would mean? That you settled part of the agreement and there is still the other part to settle?

January2015

somuchindebt wrote: »

Yes, but if it's partial payment that's fine, but settlement needs to be final. I don't know what in legal term partial settlement would mean? That you settled part of the agreement and there is still the other part to settle?

For me it's when the two words are put together, which is why I put the definition of each word.

Partial (incomplete)
final (end of the matter)
settlement (resolve the matter).

As I said, it's my opinion but I do think the term full and final settlement is more confusing. At no point is anyone of this forum making full final settlement in repayment of their debts. They are making partial and final settlements.

somuchindebt

So best to have it as final settlement
"final settlement
n. an agreement reached by the parties to a lawsuit, usually in writing and/or read into the record in court, settling all issues. Usually there are elements of compromise, waiver of any right to re-open or appeal the matter even if there is information found later which would change matters (such as recurrence of a problem with an injury), mutual release of any further claim by each party, a statement that neither side is admitting fault, and some action or payment by one or both sides. In short, the case is over, provided the parties do what they are supposed to do according to the final settlement's terms. With the glut of cases crowding court calendars and overwhelming the system and delays in getting to trial (due to three factors: increased criminal case load, increased litigious nature of society, and an insufficient number of judges), judges encourage attempts to settle, including mandatory settlement conferences with judges or experienced settlement attorneys present."
http://legal-dictionary.thefreedictionary.com/final+settlement

fatbelly

I think whatever you call them there will be some explaining to do

Gives us something to do with our leisure time, Sourcrates.

Debt Camel gives a very clear explanation (as always) here

https://debtcamel.co.uk/debt-options/less-common/full-final/

Keezing

"Final Settlement" would avoid all confusion in the context of a negotiation.

E.g. "Write to Barclays to negotiate a final settlement on your debt"