How to write off debt in the UK


According to statistics, 63% of adults in the UK are in some kind of personal debt. Working off this debt through repayment is the most obvious way to relinquish it, but there are circumstances that mean you are unable to do so. In such cases, It is possible to have creditors write off a portion or sometimes all of your debts through schemes such as IVAs and Debt Relief Orders.

This article looks at the circumstances in which you can write off your debt and some solutions to follow for your own debt concerns.

When will creditors write off my debts?

Creditors will generally be quite reluctant to write off your debts, however they may agree to write them off partially or in full if:

  • You are unemployed and don’t have the income to make monthly payments towards your debts.
  • If you are retired and have no substantial income.
  • You have a physical or mental health issues which makes it unlikely you will repay your debt. 
  • You have no assets that can be but towards your debts.

Request Letter

One of the first steps to find out whether your creditor will write off your debt is to send a debt request letter. This should state the reason you are unable to pay your debts, physical evidence such as a sick note or a financial statement and finally a statement that you are unable to pay off your debts in the future. You can find a detailed template of a debt request letter here.

Debt Relief Order (DRO)

Debt Relief Orders are for people with low income and assets with a debt of under £20,000. DROs work by freezing a person’s debt for 12 months, giving them much needed time and space to improve their financial situation. If there has been no improvement in the person’s circumstance within the twelve month window, then the creditors will agree to write off your debt. The Scottish equivalent of a DRO is a Minimal Assets Process. You can find advice on how to get a relief order on the government website. 

Individual Voluntary Arrangements (IVA)

An Individual Voluntary Arrangement is a debt repayment option in England, Wales and Northern Ireland for unsecured debts (credit cards and personal loans). IVAs usually have a term of five years, after which time creditors will write off your debts. Be aware that IVAs are listed on your credit report for six years and can affect your overall credit rating. You can find more advice on how to apply for an IVA on the government website.

Protected Trust Deed

A Protected Trust Deed (similar to IVAs) is a popular debt solution in Scotland as it has a write off within the agreement itself. During this process, you must make reduced payments over a four-year period; as this is an insolvency agreement, your unsecured debts need to be greater than the value of your assets. At the end of the Trust Deed term, creditors write off any unpaid debts. More advice and how to apply for Protected Trust Deeds can be found on the citizens advice website.

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