A final settlement (known fully as a full and final settlement of debt) is a formal agreement between two parties regarding the payment of an outstanding debt. This is an alternative method for individuals to rid themselves of debt.
Method
The debtor must formally present this offer via documentation (making their intentions and the offer perfectly clear). Whether or not the offer is accepted depends on a couple of factors, such as the amount offered compared to the debt and the number of initial payments already missed by the debtor.
Misconception
A final settlement is considered a full solution to a debt problem. The policy for such action often maintains that any debtors clearing their debt via the final settlement still gain a credit notice, affecting their credit rating.
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