How simplify debts works, with worked examples
Quick answer
Simplify debts rearranges who pays whom inside a group so everyone settles with fewer payments, without changing what any person owes or is owed in total. If A owes B $20 and B owes C $20, A pays C $20 once and B pays nothing. Splitwise and EvenOut both offer it as a group setting.
Key points
- A chain of debts collapses: A owes B $20 and B owes C $20 becomes one payment, A to C, instead of two.
- Six IOUs worth $105 can collapse to 3 payments worth $50, with every person's net balance unchanged.
- It works inside each currency separately and never converts one into another.
- In EvenOut the setting is under Settling up in group settings, tagged Recommended, and is on by default.
On this page
What does simplify debts do?
Simplify debts is a group setting that swaps a tangle of IOUs for fewer payments that leave everyone square. As of October 2026, Splitwise’s help center says it “never changes anyone’s total balance”. EvenOut’s version carries the same promise in its own words: “Fewer payments, same totals.”
The number that stays fixed is each person’s net balance, meaning what they are owed minus what they owe. Only the pairing changes. Three small cases show how.
Example 1: a chain of two debts
A owes B $20 for a dinner. B owes C $20 for tickets.
- Without simplifying: A pays B $20, then B pays C $20. That is 2 payments and $40 changing hands.
- With simplifying: A pays C $20. That is 1 payment and $20 changing hands.
Net balances are identical in both versions. A owes $20, B is even and C is owed $20. B never needed to be involved, because the $20 B received would have gone straight out again.
Example 2: a cycle that cancels
A owes B $25, B owes C $25 and C owes A $25. Everyone owes $25 and is owed $25, so every net balance is zero. Simplify debts removes all three payments.
A cycle that does not match perfectly still shrinks. Say A owes B $30, B owes C $20 and C owes A $10. A’s net is a debt of $20 ($30 going out, $10 coming in). B and C are each owed $10. Instead of three payments totalling $60, A pays B $10 and C $10, which is 2 payments totalling $20.
Example 3: six IOUs in a group of four
Here are six IOUs between A, B, C and D, adding to $105:
- A owes B $20
- A owes C $10
- B owes C $30
- B owes D $15
- C owes D $25
- D owes A $5
Add up each person’s side:
| Person | Owes in total | Is owed in total | Net balance |
|---|---|---|---|
| A | $30 | $5 | Owes $25 |
| B | $45 | $20 | Owes $25 |
| C | $25 | $40 | Owed $15 |
| D | $5 | $40 | Owed $35 |
The nets cancel: A and B owe $25 + $25, and C and D are owed $15 + $35, which is $50 each way. Now match debtors to creditors:
- A pays D $25. A is done.
- B pays D $10. D is done, since $25 + $10 covers the $35.
- B pays C $15. B and C are both done.
That is 3 payments worth $50, down from 6 worth $105. More than one arrangement can reach the same nets. A could pay C $15 and D $10, with B paying D $25, which is also 3 payments. So an app may show a different set of payments than the one above. Only each person’s net balance is fixed.
What does simplify debts never do?
It never changes what anyone owes in total. It also never merges currencies. As of October 2026, Splitwise says it works “within each currency separately” and does not combine or convert. A group with $30 owed from one expense and 30 euros from another gets two independent sets of balances, and EvenOut likewise keeps balances, settle up and simplify per currency with no conversion.
It also re-runs. As of October 2026, Splitwise says the arrangement is recalculated whenever an expense or a payment is added, so the payments you see can change after each new entry even though nobody’s net balance was altered by the rearranging itself.
One side effect catches people out. In Example 1, A pays C, someone A never bought anything with. The amount is right, but the name can be unexpected. Why you can owe someone you never paid goes through that case.
Where do you turn it on or off?
In Splitwise, any group member can change it in group settings. On the group page, tap the gear icon at the top right and scroll down to the toggle. On the web, click the gear icon, choose Edit group settings, then Advanced settings.
In EvenOut, open group settings and look under “Settling up” for “Simplify debts”, tagged “Recommended”. It is on by default, and any member who is not a viewer can flip it. Viewers see “Simplify debts is on” or “Simplify debts is off” but cannot change it.
What should you read next?
For the plain definition, see what simplify debts means. To try your own group’s IOUs, use the debt simplification calculator. Which apps offer the setting, and whether you can switch it off, is covered in apps that simplify debts. The minimum transactions to settle debts guide covers how low the payment count can go.
Frequently asked questions
How many payments can a group need at most?
Never more than the number of people minus 1, so six people need at most 5. It can be fewer when some balances cancel exactly, as in the cycle above. The minimum transactions guide covers when and why.
Does simplify debts do anything in a group of two?
No. With two people there is one net balance between them, so there is only one possible payment and nothing to rearrange. The setting matters from three people up.
Should I leave it on after payments have already been recorded?
As of October 2026, Splitwise's help center recommends leaving it on if payments have already been made in the group. Its article says that turning it off unravels the simplified payment paths, so payments already made may no longer match the individual debts that come back.
Sources
Checked October 6, 2026.
- Splitwise: What is Simplify Debts?
Keep reading
- Calculator Debt simplification calculator: the fewest payments for four people Enter up to six IOUs among four people and see the fewest payments that settle them. The example turns six IOUs worth $175 into 2 payments worth $95.
- Comparison Apps that simplify debts: who does it and can you turn it off Ten apps compared on fewest-payments settling: which simplify debts, which let you switch it off, and a worked example. Facts as of October 2026.
- Guide Simplify debts: why you owe someone you never paid Simplify debts changes who you pay, never how much. A $36 chain from Zoe to Mo to Lee becomes one payment, plus a 5-step audit for your group.
- Guide Minimum transactions to settle debts: the algorithm Settling N people takes at most N minus 1 payments, but not always the fewest. A five-person example needs 4 payments greedily and only 3 at best.