Settled in Full (SIF) Letter

Settled in full letter summary:

• A settled in full letter shows that a debt was paid in part, not in full, and that the debt has been closed and is no longer owed.

• A settled in full letter is proof you no longer owe a debt and that its balance is zero.

• You should request a settled in full letter as part of any debt negotiation with creditors. This is important in case a debt collector tries to go after you for the debt or you need to correct your credit report.

Settled in full letter definition and meaning

To get an account settled in full, three things have to happen:

• You negotiate with your creditor to release you from your debt in exchange for a lump sum or a series of payments. 

• You perform your part of the deal and make your payment(s) to the creditor. 

• The creditor releases you and zeroes out your balance.

Once those three steps have been completed, the debt is resolved. The creditor should issue you a settled in full letter. Ideally, your balance is reported to credit bureaus as zero and you never see or hear from a debt collector about that debt again. That letter protects you if the debt resurfaces in the future. 

Key concept: A settled in full letter is a document that shows a debt was partially repaid and is now considered closed and no longer owed.

More about settled in full letter

A settled letter should protect you from most collection efforts in the future. But there have been cases where a consumer showed a settled in full letter, the creditor said it never sent the letter, and everyone had to go to court. It's smart to keep a file with copies of all letters and documents, and a log of all phone calls about the debt. This file should include times, dates, names, and notes from calls, letters, and emails. 

Settled in full letter: a comprehensive breakdown

When negotiating a debt, make sure that the debt collector or creditor will provide a letter when you've paid what they've agreed to accept. Part of your negotiation should address how the payment will be acknowledged and how your account will be reported to credit bureaus. 

Ideally, you'd like to get a paid in full letter and the account reported as paid in full. This is unlikely, however, unless you pay most or all of what you owe. There's no harm in asking, though.

More likely, you'll be able to get a settled in full letter and the account reported as settled for less than the amount owed. That’s less favorable where your credit standing is concerned, but it’s fair. The main thing is that you get some proof of payment and release from the debt.

A settled in full letter should contain the following:

• Name, phone number, and address of the debt collector 

• The file or case number it uses to identify your account

• Name and account number for the original creditor

• A statement that the account has been paid or settled in full

If there's any reference to your account balance, make sure it's shown as zero. Also, look for any language that might allow the collector to pursue you for more money later.