Paid in Full vs. Settled for Less: Which Option is Best?

Paying off a loan debt is a positive accomplishment for any small business. But for businesses in distress, debt modification may allow for the loan to be ‘settled’ as opposed to ‘paid in full.’ Although the everyday terminology typically used to describe these two options is either ”paid in full” or “settled for less,” the exact and technical terms recognized by both lenders and credit reporting agencies are:

  • Paid in full
  • Settled in full


Hence, for the purposes of this article, we will look at the technical terms ‘paid in full’ and ‘settled in full.’


Below we will take a look at how paid in full differs from settled in full, review what effects each option can have on a business’s credit report, and discuss how National Credit Partners helps businesses like yours obtain unique and customized debt relief solutions – ensuring your company remains operational and on a continued path to success (despite any variety of immediate hardships).


Is There a Difference Between Paid in Full and Settled in Full?


Yes. Paid in full is an entirely different option from settled in full. Additionally, many view the latter option as having some possible negative effects. While both options will close a loan balance with $0 owed, the actual option you choose will likely have a specific impact on your credit score.


What is Paid in Full?


Paid in full is a term denoting that a business has completed all of its loan payments – both the principal balance and any interest which accrued throughout the course of the loan.

If your business never missed a payment throughout the loan repayment schedule, when your account is paid in full it will be shown as in ‘good standing.’ A good standing notation remains on your credit report for 10 years.


If your business missed a payment (or two, three, etc.) throughout the course of the loan repayment schedule, those missed payments will be notated on your credit record for seven consecutive years from the original date of the missed payment (also known as a delinquency).


What is Settled in Full?


When you settle a debt such as a loan ‘in full,’ you’ve effectively negotiated with the lender to ultimately pay a lesser amount than the total which was originally owed/agreed upon.


For example:

If your business’s loan was originally $500,000 and the account has been settled in full for $350,000, then the loan has ultimately been paid for less than the total balance. As we’ll discuss below, despite technically no longer owing on the loan, this ‘settled in full’ option can have ramifications for your company’s credit report.

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What Types of Debt Can be Settled?


In most cases, only unsecured debt (i.e. personal loans or credit card debt) is eligible for a settled in full option.


On the other hand, secured debt (i.e. mortgages and car loans) are typically based on collateral or seizable assets. As a result, if you fail to make payments, the lender can retaliate by seizing your home or repossessing your vehicle (hence, one typically does not have the option of settling a secured loan for less than the original amount agreed upon).

How Can I Get Help With Paying Off My Business Loan Debt?


The most important thing to remember is that, while paying off debt which is in collections is advisable, both options are a clear indication of being proactive and taking responsibility for your loan. Furthermore, both options are much more advantageous than simply ignoring the debt entirely. Taking the first step of addressing your debt loan problem can help you face the issue head-on and begin the process of achieving financial freedom.


At National Credit Partners, we’ve successfully helped small businesses facing significant financial challenges including defaults, collections, and legal actions achieve debt relief solutions. In fact, many of our distressed business clients were able to qualify for traditional financing (like SBA or term loans) after graduating our program.


With our decades of experience and proven results, we’re here to help your business find a debt relief solution that is tailored to directly meet your needs, challenges, and future goals.


Unlike most other debt relief companies, National Credit Partners offers unique advantages to help your business get back on track. We strive to ensure that all advances are shown as ‘paid in full’ rather than ‘settled for less’ – assuring your business remains in good standing with lenders and qualifies for future financing. This is one of countless examples of the type of personalized dedication we make to each and every client, and it can prove to be considerably advantageous for your business.


Additionally, you’ll have peace of mind knowing that we provide attorney representation to all of our clients – both legal and financial experts that will assist with permanently modifying/restructuring your advances.


Call us today at 949-676-0147 or fill out the contact form below to arrange for a free and no obligation consultation with one of our dedicated team members. We’ll review your company’s specific circumstances thoroughly and discreetly, and utilize our decades of experience and proven results to help you successfully modify your existing debt.


Don’t settle for an unproven financial advisor that could potentially make your business’s financial situation worse through inexperience. Choose National Credit Partners, the company offering direct, strong, and proven relationships established with countless creditors. We’ve helped companies like yours achieve the financial solutions they need to make a fresh start by identifying the personalized debt relief option that is right for you.


As your premier and Better Business Bureau A+ rated debt consolidation company, National Credit Partners is comprised of financial professionals specializing in helping small and medium-sized businesses like yours achieve the debt relief they need.


Complete the form below and one of our team members will reach out to you immediately.

If you are one of the many thousands of companies struggling with high interest business loans, call us today for a free consultation. Just taking the first step in talking to an expert can start relieving stress. And once you talk to a debt help specialist, you will see that there is hope.

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