A saldo e stralcio is a settlement: the creditor accepts an amount lower than the sum due, normally in a single payment, and waives the remainder. It is a useful tool for both parties, provided it is built correctly.
Why a creditor would accept less
Because a certain payment today may be worth more than the full claim tomorrow. When the debtor is in difficulty, the alternative to a settlement is often long, costly litigation with an uncertain outcome, or insolvency proceedings in which the creditor recovers a minimal percentage. Banks and purchasers of non-performing loans know this well: that is why settlements are common practice.
How the negotiation is prepared
- Analysis of the position: real amount of the debt (principal, interest, costs), strength of the creditor's title, any time-barred or disputable amounts.
- Analysis of the debtor: resources actually available for closure and overall financial situation.
- Identifying the counterparty: the claim may have been assigned; the negotiation must be conducted with whoever holds it today.
- A justified proposal: a credible offer, explained with data, is far more likely to be accepted.
What the agreement must contain
The agreement must be formalised in writing and must state: the parties, the claim being settled, the settlement amount, the payment terms and deadlines, the express waiver of the remainder and the release upon payment. It is advisable to include the creditor's undertaking to update the credit-bureau records and, if proceedings are pending, the withdrawal of the action.
Effects on credit records
After the settlement the position is updated in the credit bureaus (such as CRIF in Italy) with the status “settled” and remains visible for the periods provided by the code of conduct. It is not an immediate deletion, but closing the position is nevertheless the prerequisite for rebuilding one's creditworthiness.
Settlement or repayment plan?
If there are no resources for a single payment, the alternative is an instalment repayment plan, possibly with a partial reduction of the amount due. In this case it is essential that the instalments are truly sustainable: a plan that fails takes the position back to square one, often with acceleration of the whole debt.
