How does a debt settlement work?
We offer a free service to help our clients negotiate debt settlements with their creditors, making the process as smooth as possible.
You have the option to handle the settlement directly with your creditors, but we offer this service for free to make things easier for you.
There’s no set amount of lump sum required – you can let us know what you have, and we’ll check if your creditors will accept it.
If your creditors agree to a full settlement, you’ll make one payment that clears everything you still owe.
If you don’t have enough to settle the full amount, we can request a discount for you.
If your creditors accept the offer, you’ll make the payment and we’ll handle sending it to your creditors.
Am I eligible for a debt settlement?
Note: This option is available across the UK, and we can also help clients living abroad with UK-based debts.
A debt settlement could be an option if:
You’re struggling to keep up with your current payments
You have a lump sum available
You can use funds from:
- The sale of property or assets
- A gift from family or friends
- Equity release
- Inheritance
- Savings
- Other sources
Debt settlement options
Most clients who choose to make a settlement are in a Debt Management Plan (DMP) with us.
If this sounds like you and you’re interested in looking into this further, we can explore different settlement options such as:
Fully settle all your debts
- Use your lump sum to clear all your unsecured debts in full.
- Once paid, these accounts will be marked as “fully satisfied” on your credit file, meaning they’re considered resolved.
Settle some of your debts
- If paying all your debts in one go isn’t possible, you can choose to settle some debts with the lump sum and continue repaying the remaining debts under your DMP (unless a more suitable solution becomes available to you).
Do a partial settlement to clear your debts
- If you don’t have enough to pay in full, we can negotiate with your creditors to reduce the total amount you owe.
- These accounts will be marked as “partially satisfied” on your credit file for six years, reflecting the reduced
Whatever route you take, these options provide flexibility depending on your lump sum availability and situation, and we can help you explore the best path forward.
What are the pros and cons of debt settlement?
Benefits of debt settlement
-
Payments
With a full settlement, you make one single payment instead of ongoing monthly repayments under your DMP.
Things to consider
- A short settlement will appear as “partially satisfied” on your credit file, which may affect future lending.
- Default notices or court actions (e.g. CCJs) will remain on your credit file for six years, even after settlement.
- If creditors reject the offer, you’ll remain liable for the full debt
- If you don’t clear all your debts, you may need to consider continuing with your DMP or exploring other solutions for the remaining balances.
Which debts can be settled?
Debt settlement can apply to a wide range of unsecured debts, including:
- Bank loans
- Overdrafts
- Credit cards
- Personal loans
- Student loans If they’re not deducted from your salary already
You can’t include
- Secured debts (e.g. mortgages)
- Priority debts (e.g. rent arrears or child maintenance)
Why Choose Us?
- 100,000+ People received free, confidential debt advice last year
- £19 million In debt settled for over 4,000 clients in 2024
- Free service Service is 100% free – every penny of your settlement goes straight to your creditors
Frequently asked questions
We’ve put together a list of frequently asked questions about DMPs and we hope your query can be answered here.
What happens if a settlement offer is rejected?
If your creditors don’t accept the settlement offer, you can still use your lump sum to reduce your debts and explore other debt solutions.
How will a debt settlement affect my credit rating?
It depends on the type of settlement you do. A full settlement will appear as “fully satisfied” on your credit file. Partial (or short) settlements will be marked as “partially satisfied” and remain on your credit file for six years. Your creditors will update your credit file after the settlement is completed.
Do I have to pay a fee if I settle through PayPlan?
No – our debt settlement service is completely free. Some third-party providers charge a fee, so be sure to check before deciding how you want to proceed.
Let’s make your debt more affordable
You’re just two steps away from taking back control of your finances and freeing up more money for you and your family.
Getting advice has no impact on your credit score.
Excellent, professional, friendly and empathetic service. PayPlan have given us our lives back!
Sandra Daly
Excellent, professional, friendly and empathetic service. PayPlan have given us our lives back!
Sandra Daly