Can I write off debt?
Whether or not you will be able to write off some or all of your unsecured debt depends on the severity of your financial situation.
To be accepted for a debt write off, either through a debt solution or a direct arrangement with creditors, you generally have to be able to prove that:
- You can’t afford your repayments right now
- There’s no realistic way of you affording them in the future
- It’s not viable for your creditors to waste time and resources chasing you for money you simply don’t have
If this applies to you, you may be able to come to an arrangement with your creditors, or apply for a debt solution that includes a debt write off.
You should always seek professional debt advice before you do this, either from a money charity like Stepchange, an established money forum like the Money Advice Liaison Group, or a trustworthy debt management company.
It’s not uncommon that a creditor writes off a person’s debts
Which debt solution allows you to write off unsecured debts?
There are several debt solutions available in the UK that allow you to deal with outstanding debt at a rate you can afford, while writing off debts you can’t afford.
We’ve listed some of the most popular below.
Individual Voluntary Arrangement (IVA)
The most popular solution in England, Wales, and Northern Ireland, and IVA allows you to make a monthly payment towards your debt based on your disposable income. At the end of your payment term, any remaining debt is written off by creditors.
IVAs are Government-backed and managed by an Insolvency Practitioner, a debt specialist licensed and authorised by the Insolvency Practitioners Association (IPA), so you know you’ll be in good hands.
Trust Deed
This debt solution is essentially the Scottish version of an IVA, where you make monthly payments towards your debts based on your financial and personal circumstances and any remaining debts will be written off at the end.
It’s important to note that both Trust Deeds and IVAs are only suitable for unsecured debts. You won’t be able to have debts like mortgage arrears, child maintenance arrears, or court fines written off.
Debt Relief Order (DRO)
A DRO is often regarded as the best debt solution for people who have serious debts and very low income. A DRO will freeze your debts for 12 months, giving you time to improve your situation. If you still don’t have enough money after a year, a DRO will write off debt included in the arrangement.
Bankruptcy
Put simply, bankruptcy allows you to clear all your debts after one year (although you may have to contribute a monthly payment beyond that if you earn over a certain amount).
While that sounds positive, you will also have to turn over all your valuable assets, including your home and car. Bankruptcy also has a serious impact on your credit file, and so should only be considered in exceptional circumstances.
Can I ask creditors to write off debt on my behalf?
It’s not uncommon that a creditor writes off a person’s debts, but they will expect you to prove that your personal life or financial situation prevents you from earning enough money to repay them.
They might consider it if one of the below scenarios applies to you.
You can’t work due to serious or terminal illness
If you’re on little or no income, it stands to reason that you can’t repay outstanding debts. That won’t guarantee you a debt write off, but it may help your case.
You have a mental health evidence form
Mental health issues prevent many people from obtaining or keeping the jobs they need to repay what they owe. Creditors will likely be more considerate of your situation if you send them a debt and mental health evidence form (DMHEF), completed by a social worker.
Can you write off joint debt?
Joint debts are any unsecured debts owed jointly by yourself and a partner, like a mortgage on a family home or a joint credit card held by a married couple.
Because they operate under the principle of strict and several liability, both parties are equally responsible for a joint debt – if one person can’t or won’t pay, creditors will expect the other person to repay 100% of the debt owed.
With that in mind, you may be able to write off a joint debt, but it will be more difficult. You will have to offer reasonable proof to creditors that both you and the cosigner have no realistic way of repaying within a reasonable timeframe.
If I write off debt, will it affect my credit rating?
It depends. If you have your debt written off entirely, it will usually be marked as ‘completed’, which should mean it won’t appear on your credit history.
If you come to some form of arrangement with your creditors that sees you pay less than the total amount you owe, whether that’s through a lump-sum payment or a debt solution which offers a debt write off, then your credit rating will be impacted.
In this scenario, your debt will be marked as ‘partially paid’, even though your creditors have consented to the arrangement. Any time you don’t repay the total amount you owe, it will be reflected in your credit score.
Where can I get debt advice and guidance on writing off debt?
When you owe money to creditors, they often chase you for payments even when your financial circumstances mean that you just don’t have the money to repay them.
Sometimes it can be hard to make them understand this, but we can help. Your Debt Expert specialises in debt advice and debt solutions that allow you to write off unaffordable debt and gradually rebuild your credit file.
For friendly, free advice from an expert debt adviser, speak to Your Debt Expert today on 0800 082 8086.
