How to Write Off Debt

Of course, an IVA might not be for everyone and depending on your situation, you might not be eligible to apply for one.

The good news is that, even if you are faced with a seemingly insurmountable amount of debt, there remain various solutions you could consider for clearing, or at least reducing it.

The debt solutions available to you will depend on a number of factors, including:

If you are behind with paying off unsecured debt, you could ask your creditors if they would be willing to accept smaller repayments until your financial circumstances improve.

Once you have factored in your monthly income, household expenditure, and outstanding debt, you will be able to figure out what kind of payment you can, for the time being, afford to make on a regular basis to each of your creditors.

If you struggle to reach new agreements with creditors by dealing with them yourself, you could consider a solution through a third party in the form of a debt management plan (DMP).

Though it is possible to self-manage a DMP, you might be more comfortable with asking a third-party organisation — such as a debt charity — to set up a DMP on your behalf.

In the latter instance, you will make a single monthly payment that is sent through the DMP provider and subsequently shared out amongst your creditors. However, this is all on the assumption that the creditors agree to the plan, as they would not strictly be obliged to do so.

With an IVA, only 75% of your creditors at the decision procedure have to agree to the scheme, so this may be a better option than a DMP if you’re unsure about whether all your creditors will agree to a DMP.

It’s important to get financial advice first as DMPs might not be the best option for all people saddled with debt — especially since they can only be used for paying unsecured debt.

It is a legal procedure to help you get out of a financial position that is not changing, where you are unable to make your payments. Your existing assets, such as your home, will be sold in order to pay off your debts.

The fee is £680, however, it can be paid in instalments, although the application will not be processed until the fee is paid in full.

You can apply for bankruptcy online. Once you have completed the application and paid the fee, the bankruptcy order will be made.

If you own significant assets, you will want to carefully consider whether bankruptcy is an appropriate solution. When the bankruptcy order is made, the fees charged by the Official Receiver and Trustee will be significantly higher than other solutions.

The deed will last three to four years and the remaining debts will be written off once the required payments have been made into the PTD. The PTD will be supervised by a trustee who will be a qualified insolvency practitioner, who is regulated by law.

When taking part in a PTD, you transfer the rights of the assets you own to a trustee. The trustee has the right to sell these items as a contribution toward the debt repayments. You may be able to exclude specific assets from the PTD by offering creditors suitable compensation for the asset. You will then also make a monthly contribution to your creditors, usually for 36 to 48 months, although this can vary, and the contribution will be based on your disposable income.

In order for a protected trust deed to be approved, half of your creditors need to accept the proposal. Once the deed becomes protected, the creditors are no longer able to take legal action against you to collect your debt.

Payments to the creditors will go through your trustee who will distribute the payments to your creditors on your behalf.

An affordable payment will be paid into the scheme and will be shared between the creditors to whom the debt is owed.

The amount is completely up to you, as long as the full repayment is made within a reasonable period of time.

If the debt cannot be repaid within an acceptable time period, then this is not the debt solution for you.

You can choose to have the money released all at once or access the money in instalments. The money can be used for home improvements, supplementing income or paying for any long-term care. It can also be used to help you repay any debts you owe.

There are four equity release plans to choose from: