Amigo customers who were mis-sold loans are expected to get back less than half of the interest and fees they were charged.
The guarantor lender has published two different redress schemes online which outlines how much compensation customers could get.
One scheme will see affected borrowers get back just 42p per £1 owed, while the second scheme will see borrowers get back 29p per £1 owed.
The first option is being touting as a "new business" scheme which will require Amigo to recommence lending within nine months and raise £70 million in the first 12 months of operating.
The second option, which Amigo will automatically revert to if the conditions of option one aren't met, is effectively a wind down of the business.
Do you have a complaint against Amigo Loans? Let us know: mirror.money.saving@mirror.co.uk
Both scenarios - of which the money owed back is still only an estimated figure at this stage - would see customers get back less than half of what they’re owed by Amigo.
You can see full details of both schemes on the Amigo website.
To get the go ahead, either scenario would need to be approved by both the High Court and customers awaiting compensation.
It is expected the High Court hearing will take place in February 2022, followed by a vote from borrowers in April 2022.
Amigo, which offers loans with an interest rate of up to 49.9%, has warned it could collapse as it faces a £345million compensation bill.
It had proposed to pay back as little as 10p for every £1 owed - but this was rejected by the High Court back in May this year.
At the time, the Financial Conduct Authority said its proposal placed “disproportionate burden on customers” and Amigo said it was “reviewing all its options”.
Amigo stopped selling loans last year during the Covid crisis after complaints rocketed to 13,000 in 2020 - up from 500 in 2019.
A spokesperson from Amigo said: "Shaping a new scheme has been a long process and we’re grateful to all stakeholders for their patience.
"This is a complex process which, given our financial position, provides no perfect path for either creditors or existing shareholders and significant hurdles remain.
"However, the issuing of our letter to customers is a vital next step towards dealing with our historic complaints liability and finding a fairer resolution to righting wrongs of the past.
"We hope a successful new Scheme will also allow a changed Amigo, under a new management team, the opportunity to bring forward a new, regulated lending proposition for a segment of the market where options are diminishing and demand remains high."
What happens next for Amigo customers?
If you’ve already launched a complaint against Amigo, this is effectively on hold until the firm decides what action to take next.
You can also in theory still escalate your claim to the Financial Ombudsman after eight weeks - although it too has paused complaints for the time-being.
If Amigo was to collapse, then any compensation claims would be in the hands of administrators.
If you’ve yet to make a complaint, and you think you could be entitled to money back from Amigo, you can still put in a new claim.
To make a complaint, you can contact Amigo directly for free - MoneySavingExpert and DebtCamel have template letters you can use.
Crucially, you should avoid using a claims management firm, which can charge you as much as 30% of your payout for their service.
Those who are eligible for a payout are borrowers who were mis-sold loans and treated unfairly by Amigo.
For example, you could be owed money back if you were given the loan but couldn’t really afford it - and Amigo failed to help you when you told them you couldn’t make the repayments.
You can make a claim if you’re still paying off an Amigo loan, or if you’ve already finished your repayments.
Finally, if you have an on-going loan with Amigo, you do need to keep paying this as it could affect your credit score if you stop.
Your guarantor could also be asked to stump up the funds if you miss a payment.
