How to write off debt in the UK

There is no “government debt write-off scheme”, whatever an advert says. The routes below are all real, but each one comes with something you give up: a record on your credit file for around 6 years, fees, rules about your home, or years of monthly payments. What follows is general information about how each route works and who it usually suits. A debt adviser can go through which ones are actually open to you.

What does it mean to have a debt written off?

There are two different things people mean:

• A legal release. At the end of a debt relief order (DRO), a bankruptcy, a completed IVA or a protected trust deed, the law releases you from the debts included in it. The creditor cannot pursue you for them again.
• A creditor’s decision. A creditor can agree to write off all or part of what you owe, for example if you are seriously ill or offer a lump sum in settlement. Get that in writing. A lender closing your account or selling the debt to a collector is not the same thing: the debt is still owed.

Some debts are not written off by a DRO or bankruptcy. They include student loans, court fines, child maintenance, Social Fund budgeting and crisis loans, and debts from fraud. Debts secured on your home or car are outside them too: the secured lender can still take the property. A DRO also leaves out unpaid TV licence fees.

What are the formal ways to write off debt in England, Wales and Northern Ireland?

• Debt relief orders are made by the Official Receiver, not a court, and you can only apply through an approved debt adviser. Creditors cannot chase you for listed debts during the 12 months, and those debts are written off at the end. Northern Ireland has the same headline limits.
• Bankruptcy writes off most debts when you are discharged. The trade-off is that a trustee can sell assets, including your share of a home, and you may have to pay spare income for up to 3 years. In England and Wales you apply online; in Northern Ireland it goes through the court.
• IVAs are legally binding agreements under the Insolvency Act 1986 (the Insolvency (Northern Ireland) Order 1989 in Northern Ireland), set up and run by a licensed insolvency practitioner. You pay what you can afford for 5 or 6 years, and what is left of the included debts is written off only if you complete it. About one in three IVAs from 2016 to 2018 ended early (terminated), and if that happens the full balance plus frozen interest can be claimed again.

How is it different in Scotland?

Scotland has no IVAs and no DROs. The equivalents are:

• Minimal Asset Process (MAP): a route into bankruptcy for people with low income and few assets. No fee, debts of up to £25,000 (student loans not counted), total assets of no more than £2,000 with no single item over £1,000, no land or property, and a vehicle worth up to £3,000 ignored if you reasonably need it. Discharge usually after 6 months.
• Sequestration (bankruptcy): a £150 fee, which some people do not pay, and a minimum debt of £3,000 for a full application. Discharge is usually after a year, but contributions from income can last 48 months.
• Protected trust deed: the nearest thing to an IVA. Minimum debt £5,000, usually 48 months of payments to a trustee (a licensed insolvency practitioner), after which the remaining included debts are written off.

The Debt Arrangement Scheme repays debts in full rather than writing any off. See debt solutions in Scotland for more.

Can a creditor agree to write off what you owe?

Yes, but it is the creditor’s choice. FCA rules require lenders to treat people in financial difficulty with forbearance, such as freezing interest or accepting token payments. They do not require a lender to write anything off.

Asking for a hardship write-off

Creditors are most likely to consider it when there is no realistic prospect of the debt being repaid, for example:

• you have a serious, terminal or long-term illness or disability that makes working unlikely
• you have a long-term mental health condition that is unlikely to improve
• you rent, have no savings or assets of value, and your income (often benefits or a pension) only covers essentials

Write to the creditor explaining your situation, with a budget showing your income and spending and evidence such as a doctor’s letter or a Debt and Mental Health Evidence Form. If it agrees, keep the letter confirming the write-off. It will help if the debt is later sold and someone else asks for payment. The balance should then show as zero, but the account usually shows as defaulted on your credit file for up to 6 years.

Full and final settlement

If you have a lump sum (from savings, an inheritance or help from family), you can offer it to a creditor in return for writing off the rest. The creditor does not have to accept.

• Get the acceptance in writing before you pay. Under FCA rules, a firm that accepts a settlement offer must confirm “formally and unequivocally” that the payment settles your liability.
• Deal with priority debts first, such as rent, mortgage, council tax and energy arrears.
• Expect a mark on your credit file. The account usually shows as partially settled rather than paid in full, for up to 6 years.

Does old debt get written off after six years?

Not in England, Wales or Northern Ireland. Most unsecured debts become statute-barred 6 years after the creditor could first sue. The creditor can then no longer win a court case if you raise the time limit, but the debt still exists and can still be asked for. Judgments are different again: a CCJ can still be enforced after 6 years with the court’s permission.

In Scotland, most debts are extinguished after 5 years with no court action, payment or written admission. That is a true write-off, but it does not apply to court decrees, which last 20 years.

Are “write off your debt” adverts trustworthy?

Treat them with care. The Financial Conduct Authority warns that some lead generators make misleading claims about how much debt can be written off, call debt solutions “government backed”, appear at the top of search results and in social media ads, and may pretend to be debt charities. Some push people towards IVAs because they are paid when they do.

The Advertising Standards Authority has ruled against write-off percentage claims that were not backed by evidence, and against ads for “Free Government Debt Support” that implied an official link. Watch for:

• a percentage of debt “written off” in a headline
• “government”, “new legislation” or official-looking logos
• “free” when the likely outcome is a fee-charging IVA
• “quick”, “easy” or “anyone can qualify”

Before you go ahead with anything, check that a debt advice firm is on the FCA register, and that an insolvency practitioner is licensed by the IPA, ICAEW or ICAS. For a protocol IVA you must be given a key facts document before you sign.

IVA Helpline is an introduction service: if you use our checker, we can pass your details to a licensed insolvency practitioner or debt adviser. Free, impartial advice is also available from MoneyHelper, StepChange, Citizens Advice and National Debtline: see where to get free debt advice.

What to do next

1. List every debt, who it is owed to and roughly how much, and mark which are priority debts.
2. Work out a budget: income, essential spending and what is left.
3. Take that to a debt adviser, who can go through which routes to a write-off are open to you, and what each would mean for your home, job and credit file.
4. Compare the options side by side in debt solutions compared and our debt problems hub before signing anything.