How to Write Off Debt 

 March 13, 2022

By  admin

A lot of people want to know whether or not there is any way they can get their debts written off. There are a number of different debt solutions that give people the ability to write off a number of debts. In some solutions you will be required to make a payment, and in others, you will not.  The amount written off in any of the solutions depends on your financial circumstances.

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You need to be mindful of advertisements you may see online or on television about different ways of writing the debt off. These ads can often be a promotion for debt solutions that make the most money for the businesses advertising them, rather than the solution being right for you.

The best thing to do is make sure you get professional advice to help you understand the available solutions for your circumstances, rather than going ahead with any debt solution. This will give you the ability to determine what options are going to be right for your circumstances and also how your situation is going to be impacted. 

Which debt solutions give you the ability to write off debt?

There are a number of different insolvency options that can make it possible for you to either write off all of your debt or some of them. The three main options here are an IVA, DRO, or bankruptcy. So, let’s take a look at each one so you can get a better understanding. 

  • Individual voluntary arrangement (IVA) - This is a formal agreement whereby you can make affordable debt repayments, typically over five or six years, at the end of which the remaining debt is written off.

  • Debt relief order (DRO) - Another way of getting your debts written off is with a DRO. This is suitable for people who fit the criteria, so have few assets, relatively low level of debt and cannot afford to pay their creditors more than £75 per month.

  • Bankruptcy - The final option to consider is bankruptcy, which is a type of insolvency that will write unsecured debts off if you are not able to repay them. If you have any assets, for example, a car or a house, they may be sold off so that your debts can be paid. 

It is important to note that these three options are available for people in England & Wales, and Northern Ireland. However, if you are in Scotland, these solutions are not going to be applicable. Instead, these are the three options that you will need to consider:

  • Protected trust deed - This is an agreement that is legally binding whereby you will make lower payments over a period of four years, and then your unsecured debts will be written off at the end of this.

  • Scottish bankruptcy or Sequestration - Next, we have Scottish bankruptcy, which is a type of insolvency that will write off unsecured debts if you are unable to repay your debts. Any assets that you have, for example, a vehicle or a property, may be sold off to pay your debts off. 

  • Minimal assets process (MAP) bankruptcy - This is a different kind of bankruptcy, which is aimed at individuals that do not have a lot of assets and are on a low income.

There may be some benefits associated with these insolvency measures when compared with trying to make a direct agreement with your creditors to write the debt off. For example, insolvency is legally binding, and once in the solution, the creditors are legally prevented from recovering the debt from you directly.

However, there are some disadvantages that you need to consider as well. For example, there are some insolvency approaches that will require a fee to be paid upfront. Plus, there is also the risk that you will need to sell some of your assets, such as your vehicle or property. No matter what insolvency solution you select, it is going to have a negative impact on your credit file, so do keep this in mind.

Is it possible to ask creditors to write the debt off?

We tend to speak with individuals who are in a position whereby they cannot afford to pay any money toward their debts. If you have a terminal illness or you are permanently not able to work, you could find yourself in this situation.  Alternatively, you may find yourself in this position as a result of domestic violence, or coercive and controlling behaviour in a relationship.

If this happens to you, it may be worth speaking with your creditors, either directly, or through a debt charity, to see if the debts could be written off. There are some creditors who may be willing to do this if certain circumstances are applicable, for example, they know that there is a very slim chance they will be able to get any sort of repayments from you. 

Aside from this, you will need to show them evidence that it is not fair or worthwhile for them to keep pursuing the debt. They also need to see that you do not have any assets that could be used for paying the debt back. 

Nevertheless, creditors will only typically agree to write off debts in cases that are serious. You will need to supply some sort of proof, for instance, medical evidence, before this option is considered. 

In practice, rather than writing the debt off, the creditors may simply agree that they will not get in touch with you about the debt for a specified time period. 

Should you be dealing with mental health trouble at present, we would recommend that you tell the creditors about this. 

Your creditors may be more considerate when dealing with you if you send them a debt and mental health evidence form, known as a DMHEF, which your social care or health care worker has completed for you. 

Other pieces of proof that you can provide include a copy of your budget summary, as well as a death certificate for the person who owed the debt if this is applicable. 

While it can be difficult to get someone to write off your debt, it is possible and there are some evident advantages that are associated with this. This includes the following:

  • You can make a fresh start

  • Anxiety and stress are lowered

  • Recovery action stops

  • You will be released from the burden of debt

The majority of creditors will be willing to think about writing your debt off if they are convinced that the situation you are in means that pursuing any debt is not likely to be a success, even if the amount is very small. 

Even if they are not able to write the debt off, i.e. legal reasons prevent them from doing so, they may make the decision that they will not recover the debt and therefore they will basically stop chasing you for the money you owe.

Will your credit rating be impacted if you write your debt off?

If you have your debt written off in full, it will be marked as paid on your credit history. Nevertheless, if you have missed any payments, the account has been defaulted prior to you paying the balance off, or you paid less than what was agreed, this will be recorded on your file for a minimum of six years. 

In some instances, creditors could be willing to write off some of the debt you owe should you offer to pay the remaining amount over a few months or as a lump sum. This is what is known as a final and full settlement. This will be marked on your credit file as a partial payment. 

There is no guarantee that your creditors will be willing to accept your offer. The chances of them agreeing to this will depend on the amount of money you are able to pay to them. Nevertheless, you have a better chance of this being accepted than your creditors simply agreeing to write off your entire balance. 

We're Here to Help YOU

Speak with Our Team of Debt Consultants.

Do you have questions or would you like more advice?

You can book an appointment with our team of debt consultants in minutes. 

Just click the button to book your appointment today.

Contact us for more information about writing off debt

If you feel that you are in a position whereby you cannot afford to repay the debt you owe, the best thing to do is get in touch with us today and will be happy to review the options available to you. We have a friendly and experienced team on hand who will happily answer your questions and enable you to get on the right path when it comes to financial freedom. 

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