Definitions
Discount: A reduction in the total amount owed by the debtor. This occurs when the Collection Partner and debtor agree to settle the debt for less than the full outstanding balance.
Settlement: An agreement to resolve a debt, which may include full payment, partial payment at a discount, or an installment plan. Settlements involving discounts require written Client approval.
Approval rules
The Standard Debt Collection Agreement (SDCA), Section 08, states:
The Collection Partner may not offer discounts without written approval from the Client.
The Client must approve any discount before the Collection Partner can finalise the settlement with the debtor. This approval process takes place via the Communication Center - the built-in chat thread on the case page. The Collection Partner submits the discount proposal through the chat, and the Client responds with approval or rejection in the same thread.
For installment plans (payment spread over time without reducing the total amount owed), the Collection Partner may arrange agreements of up to six months without prior Client approval. Installment plans extending beyond six months require written Client approval. See Installment plans for details.
Success fee calculation on discounted settlements
When a Client approves a discount and the debtor pays the reduced amount, the success fee is calculated based on the amount actually paid by the debtor, not on the original principal.
Example:
Original principal: $10,000
Client-approved discount: 20%
Amount paid by debtor: $8,000
Applicable success fee rate: 15%
Success fee charged: 15% of $8,000 = $1,200
This rule applies regardless of jurisdiction (European or International) and regardless of the age of the debt. For the full success fee rate tables, see Success fees: how pricing is calculated.
Important: the success fee rate is locked at the moment the case is created, based on the original principal amount. If a discount reduces the amount collected to a figure that would normally fall into a lower fee bracket, the original rate still applies - the bracket does not change.
Impact by actor
Client
Must provide written approval before the Collection Partner can accept a discount on the Client's behalf.
Receives the discounted amount minus the success fee and any applicable charges.
May reject a proposed settlement; see case close code SettlementRejectedByClient.
Collection Partner
Must request written Client approval before offering or accepting any discount.
Earns a success fee based on the amount collected, not the original principal.
May arrange installment plans of up to six months without Client approval, provided no discount is involved.
Debtor
May propose a reduced payment to the Collection Partner.
Benefits from a discount only if the Client approves it in writing.
If anything in this page conflicts with the Standard Debt Collection Agreement (SDCA), the SDCA is the legally binding source of truth.