Debt Discounts and Settlement Offers – How Does it Work?

What is a debt settlement offer?

If you are finding it hard to pay your debt, you may be able to look into a debt settlement offer. In some cases, your creditor may also contact you to talk about this.

A debt settlement offer is a way to pay back some or all your debt for less than you owe. Sometimes, you might pay a smaller amount all at once. Other times, you might pay the smaller amount bit by bit over time.

If you and your creditor agree to this, the rest of the money you owe could be written off. But your creditor must say yes to the debt settlement offer before this can happen.

Here at Lowell, we usually use the words ‘debt discount’ instead of ‘debt settlement offers.

Deciding if a debt settlement offer is right for you depends on your money and personal situation. Your creditor doesn’t have to offer you one or say yes if you ask.

If you’re unsure about whether a debt settlement offer is right for you, you can get free help and advice from organisations like Money Wellness.

What is a full and final settlement?

A full and final settlement means your creditor agrees that you can pay less than the total amount you owe. You might repay this as one lump sum, or through a payment plan over time.

Sometimes, people use money they’ve saved or received – like from a bonus or a gift from a family member – to help pay a full and final settlement.

When you pay a full and final settlement, this will be recorded on your credit file for up to six years. It will show as ‘partially satisfied,’ which means the debt was settled for less than the original amount owed. In these cases, the balance will reflect as zero, and some credit files may display a 'P' flag to indicate that only part of the balance was paid.

What is a partial settlement?

A partial settlement is like a full and final settlement, but with one key difference.

You still pay less than the full amount you owe, either in one payment or through a payment plan.

The difference is how it shows on your credit file. A partial settlement is marked as ‘partially satisfied’, for up to six years. This shows you have paid some of the debt, but not all of it.

At Lowell, we only offer partial settlements. So, if you’re a Lowell customer and have been offered a ‘debt discount’ by us, this means you have been offered a partial settlement. 

What should I offer to settle debts?

There is no set settlement percentage that is right for everyone.

The amount you might offer to pay depends on your personal situation and what you can afford. Creditors don’t have to say yes to the first offer you make, so sometimes people try to find a better deal by talking with their creditor.

For more help on how to work out a suitable offer, you can read the guide from National Debtline on full and final settlement offers.

Do debt settlement offers apply to priority debts?

Priority debts are the bills and debts you should try to pay first. This is because the people you owe money to – called priority creditors – have more ways to get their money back than other creditors.

Priority debts include things like:

• Rent or mortgage arrears
• Council tax arrears
• Gas or electricity bills you haven’t paid

These debts are more important because not paying them can cause serious problems, like losing your home or having your energy cut off.

If you have a lump sum of money to pay your debts, you will usually need to use some or all of it to pay your priority debts first.

Can I settle debts with multiple creditors?

Yes, it is possible to settle debts with more than one creditor, and if you’re looking to settle multiple debts, you can contact free money advice groups, like MoneyHelper, Money Wellness, and National Debtline for help with this.

Can I settle my debts with Lowell?

In some cases, we may be able to offer a discount on your balance.

Getting a discount on your Lowell debt isn’t always possible - it depends on your individual circumstances and the details of your account. You might have heard this referred to as a ‘Lowell debt discount’ or ‘Lowell settlement offer’, but we simply call it a discount.

If you've received an offer of a discount, you can choose to either pay the balance in full or in instalments. Payment arrangements are based on an affordability review, so we’ll work with you to find an option that suits your situation.

We understand that having debt can be worrying. If you have a debt that's been purchased by Lowell and you're not sure what to do next, we have a helpful guide that explains how we work with you – including what happens if you can’t pay or if your situation has changed. 

Does Lowell offer debt discounts?

If you're worried about your debt and want to know if you could get a debt discount, please get in touch with us. Our helpful team will always take the time to listen and understand your situation.

Some of our discount offers are only available for a limited time and may come with specific conditions. Typically, our discounts are offered over 3, 6, 9, or 12 months, depending on the type of debt. However, the exact timeframe will be outlined in the individual offer.

We can help you set up an affordable payment plan that works for you. If things are tough right now, we'll give you time to get back on track. You can also take a look at our guide to your next steps, which explains how we work with you.

If you need more support, we can also put you in touch with free, independent organisations that can offer help and support.

If your debt has been purchased by Lowell, the easiest and most manageable way to clear your debt as soon as possible is by working with us to set up a payment plan.

Will a debt settlement affect my credit score?

If you accept a discount on your debt and pay the agreed amount, your account will be closed, and the debt will no longer show as unpaid.

However, a debt settlement may still appear on your credit file for up to six years. Once the balance is paid, whether in full or through a payment plan, it will show as zero. However, if only part of the original debt has been settled, the account will be marked with a ‘P’ flag, indicating it has been partially satisfied.

Lenders looking at your credit file will see that the debt was cleared for less than the full amount. This could make borrowing harder or affect the cost of credit that is offered to you in the future for things like loans, mortgages, or credit cards.

To find out more, you can read this article by Experian on how settling a debt can impact your credit score. 

What should I do if I receive a Lowell debt discount offer?

To accept the discount, you'll need to get in touch with us. We’ll work with you to set up a payment plan, or, if you’re able, you can clear the discounted balance in one payment.

You can do this by calling us, making a payment to your Lowell account online, or through our mobile app.

In any case, if you decide to start a payment plan, we’ll make sure it’s fair and reasonable based on your budget. You can talk through this with us on the phone or use our simple Budget Calculator to work out an affordable payment plan. 

Can I delay payments on a debt settlement?

No, you can’t delay payments on a debt settlement offer. You’ll need to either pay the discounted amount in one go or set up a payment plan.

We can agree a start date for when you want to start paying that works for you, but the payment will need to begin within a set timeframe.

The discount can only be applied to your account while setting up a plan with us, or while we’re arranging your one-off payment.

What happens if I accept a Lowell discount offer and can't keep up with payments?

If you’ve accepted a discount and started a payment plan, it’s important to keep up with your payments. If you miss a payment, it’s possible that the plan may be cancelled and the discount removed.

If you think you’re going to miss a payment – or already have – please get in touch with us. Let us know that you’ve had a discount applied to your account, and we’ll see how we can help.

If your situation changes, or if you're worried that you might miss payments, we may be able to pause payments or give you time to get things back on track. We can also help put you in touch with free, independent organisations who give support with debt and money worries.

Getting a debt discount offer from Lowell could help you take step towards becoming debt-free with Lowell. Even if a discount isn’t available, setting up a payment plan with us is still a simple and affordable way to begin clearing your debt with Lowell.

For more support and guidance on debt and how working with Lowell can help you, visit our debt guidance hub.