Debt Settlement Calculator — Full and Final Settlement Offer

Debt Settlement Calculator — Full and Final Settlement Offer

The debt was £9,400. I had £3,500 in savings. I called the collection agency and made an offer. They said no. I sent a letter. They said no again. Three weeks later they called back and accepted £3,800 — 40 pence in the pound on a debt they had bought for probably 8p. What I did not know at the time was that I had far more power in that negotiation than I realised. This calculator gives you that power — your opening offer, your realistic settlement, and the letter to send.

This is the only free full and final settlement calculator in the UK. It uses real negotiation ranges based on debt age, type and creditor behaviour — not generic percentages — and generates a ready-to-send letter template personalised to your numbers.

Why Debt Settlement Works — The Economics

Debt buyers — the companies that call you about old debts — typically purchase them from original creditors for 4–12p in the pound. A debt buyer who paid 8p for your £8,000 debt has already made a profit at £1,000. They have every financial incentive to accept a settlement well below the face value — especially on older debts approaching the statute barred date.

The Negotiation Rules — Never Break These

Tax Implications — UK and US

UK: If the amount written off exceeds £5,000, HMRC may treat it as income. In practice, for consumer debt settlements under £5,000, tax implications are rare. For larger settlements seek tax advice before proceeding. US: Forgiven debt over $600 is reported on a 1099-C and may be taxable. The insolvency exception (IRS Form 982) may apply if your liabilities exceed your assets at the time of settlement.

Frequently Asked Questions — Debt Settlement UK

What percentage should I offer to settle a debt?

It depends on the age of the debt. For debts less than one year old, expect to settle at 70–85% at best. For debts two to three years old, 35–50% is realistic. For debts four to five years old, 20–30%. For debts approaching the statute barred date — over five years old — 10–25% is often accepted. The calculator gives you your specific range based on your inputs.

Does a settled debt affect my credit score?

Yes. A settlement appears as “Partially Satisfied” on your UK credit file — better than an active default but still a negative mark. It stays on your credit file for six years from the original default date — not from the date of settlement. In the US it appears as “Settled for less than full amount” for seven years from the date of first delinquency.

Can I settle a debt that has a CCJ against it?

Yes. You can negotiate a settlement on a CCJ debt. If you pay in full within 30 days of the judgement, the CCJ is removed from the Register of Judgements entirely. If you settle after 30 days, it is marked as “satisfied” on the register but stays visible for six years from the judgement date.

What if the creditor refuses my settlement offer?

Wait. Do not chase them. A counter-offer will come in most cases — especially on older debts. If the debt is approaching the statute barred date, time is on your side. Every month that passes without a CCJ reduces their negotiating position. Never increase your offer without a counter-offer from them first.

Should I settle before or after the statute barred date?

Check your statute barred status first using our free Statute Barred Checker. If the debt is already statute barred, you have no legal obligation to pay it and the creditor cannot take you to court. Settlement may still make sense to stop collection pressure and clear the account — but the power dynamic is entirely in your favour.