How much to offer in a full and final settlement
There is no fixed percentage, and anyone quoting one is guessing. There is, however, a logic creditors use — and once you know it, the offer writes itself.
What creditors actually weigh
Who owns the debt and what they paid for it. How long it has been in arrears. Your income and surplus — a person who could sustain payments is offered less discount than one who plainly cannot. Whether other creditors are receiving offers too, and whether they have accepted. Whether the money is genuinely a one-off from a third party, which explains why it cannot simply be paid monthly. A well-evidenced letter answering all five earns a better outcome than any number.
Building the offer
Total the lump sum that exists. Divide it pro rata across creditors by balance, exactly as a repayment offer would. Send each the same budget and the same explanation of where the money is from. The full and final settlement letter sets the terms: acceptance in writing, the balance marked settled, no future pursuit, before a penny moves.
What it does to your credit file
A settlement for less than the balance is normally recorded as partially settled, not settled in full — a real distinction with a six-year life. Weigh it against what continued arrears would record anyway; for most people in difficulty the settlement marker is the better of two imperfect records.
Settling inside an IVA
An arrangement already running has its own route — a lump-sum variation voted by creditors — covered in settling an IVA early. The same logic applies, with the supervisor’s recommendation added to the scales.