UK Debt Write-off Explained

For anybody battling outstanding debts, the most effective option to resolve financial hardships is to write off debt. This is a process in which creditors agree to forgive a portion, or in some instances, all of your debt, based on your specific financial circumstances.

For some people, this can ultimately be the best debt solution.

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How Can You Write Off A Debt?

In the United Kingdom, there are three methods to have your debt written off. Each has a unique mix of benefits and drawbacks, so assessing them against exceptional circumstances is critical. Going bankrupt or insolvent should be seen as a last alternative and should not be handled carelessly.

It is a legally binding procedure that will remain on your credit record for six years from the date of award and will significantly impact your future ability to get credit. It will also be publicised and may affect your present or future work. If you are a homeowner or own any other property, you could face repossession.

There are three types of insolvency:

How Long Does It Take To Write Off A Debt?

In the United Kingdom, most people’s unsecured debt expires six years after they began or six years after they last made a payment to or had communication with their creditor. Bear in mind that debts are not automatically forgiven after a certain period.

Unsecured debt such as credit cards, loans, and overdrafts may become unenforceable after a six-year limitation. However, the debt continues to exist; it just becomes statute-barred, which means your creditor can no longer pursue recovery of the unpaid sum in court.

What are the debt write off options in Scotland?

In Scotland, Trust Deeds allow you to write off a part of your debt after a particular time. However, you will need the assistance of a certified money counsellor or insolvency practitioner to negotiate the monthly payment amount with your creditors.

Trust Deeds are often used to safeguard unsecured debts – these debts include things like bank overdrafts, credit card debt, and utility arrears. Your property is transferred to a trustee, who manages the Deed and distributes the proceeds to your creditors.

A Protected Trust Deed precludes creditors from pursuing you in court to collect their debt as long as you continue to make the payments set.

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Our trained advisors are here to help, so if you think an IVA proposal is one of the best debt solutions for you, don’t hesitate to call us on 0800 464 7235 to speak to one of our trained debt advisors or click below to see if you qualify…

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Do You Qualify For A Debt Write Off?

It’s important to be aware that there are certain situations where, as long as you can provide evidence, a creditor may be more inclined to offer you debt forgiveness.

If you are a pensioner

In some instances, creditors may recognise that they have little prospect of retrieving their debts. Suppose you are a pensioner or reaching the age of eligibility for an old-age pension. Creditors might write off debt, an existing credit arrangement or ongoing debt if you can show creditors that you are on a fixed income with little likelihood of increasing it.

If you are unemployed

Creditors may agree to forgive your debts if you’ve been unemployed for a long time and have a reasonable justification. Unemployed individuals might show that their income and expenditures prevent them from making sufficient payments on their obligations, which creditors will consider.

You have physical or mental health problems

When creditors attempt to collect a debt, they may be oblivious of your health issues. For example, you must determine whether or not to inform your creditors about your mental health problems. While writing off debt is not common practice, certain creditors may forgive debts when a customer has mental or physical health issues.

The Money Advice Liaison Group provides information on how debt can have a detrimental effect on one’s mental health. Following their recommendations in the Good Practice Awareness Guidelines, if you are suffering from any mental health issues, there is a debt solution.

According to the recommendations, lenders should consider your debt written off when the following conditions exist:

  • The consumer has a long-standing mental health issue.
  • Because the customer’s situation is unlikely to improve.
  • If it is also improbable that they will be able to repay their obligations.

A health or social care practitioner can complete a mental health evidence form. After then, you could use it to inform creditors of your personal circumstances.

If you believe a creditor is not treating you properly and is aware of your health condition, you have the right to file a complaint against them.

Debt Solutions To Write Off A Debt

Many insolvency debt solutions can wipe part or all of your debts. You should be aware that any debt resolution that does not entail completely repaying your debts will undoubtedly hurt your credit report and make obtaining new credit much more difficult.

Additionally, your information may be published in a public registry (for example, the Insolvency Register), limiting your ability to work in some professions.

Choosing a debt solution that cancels part or all of your debts may seem appealing. However, depending on your own financial state – and future goals – this may not always be the best debt remedy for your circumstances.

Debt Relief Order (DRO)

A Debt Relief Order is a statutory debt remedy for those with debts of less than £20,000 who have little income and assets and hence have little chance of repaying their outstanding debt.

A DRO suspends a person’s debts for twelve months, giving them the time and space to improve their financial status. If your financial status does not improve within a year of the DRO, creditors will agree to forgive your debt.

The Scottish counterpart of a DRO is a Minimal Asset Process.

Protected Trust Deed

In Scotland, the most often used debt solution is a Trust Deed. It is so popular because the agreement has a write-off provision.

A Trust Deed enables individuals to enter into a legally enforceable arrangement with their creditors in which all of their obligations are consolidated into a single monthly payment. After the Trust Deed’s tenure – typically four years – creditors will write off any unpaid debt, enabling you to start again.

Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement (IVA), similar to a Trust Deed, is a debt repayment option accessible in England, Wales, and Northern Ireland that enables you to repay unsecured debts such as credit card debt via a series of monthly instalments.

An IVA typically lasts five years, after which creditors write off all outstanding obligations. While you will be free of the obligations covered by the agreement, taking an IVA may impair your credit score and appear on your credit record for six years.


The official receiver’s office, a division of the Insolvency Service, will be informed after a bankruptcy order is issued. They will then call the bankrupt person to arrange for complete disclosure of their assets and obligations, income and expenditures to evaluate how their affairs are handled. This interview could either take place in person or by phone.

An insolvency practitioners association often appoints a trustee in bankruptcy. Alternatively, the bankrupt’s affairs will be retained by the official receiver, which is often the case when there are little or no assets to liquidate for the benefit of creditors.

In the case of bankruptcy, all relevant information must be provided to the official receiver or trustee. Failure to do so may cause the bankrupt person to be considered obstructive, and an application may be filed to postpone the bankrupt’s discharge.

Sequestration, or Scottish bankruptcy

Sequestration is a type of insolvency that may be appropriate if you cannot repay your debts in a reasonable amount of time. Your personal property, such as your home or vehicle, may be auctioned to write off debt.

From school loans and personal loans to council tax and credit card debt, sequestration enables you to have your obligations wiped off after a particular time of making monthly payments.

Additionally, you must surrender all of your assets (valuable possessions) to the agreement. You must owe more than £3,000 to be eligible for sequestration.

A qualified Insolvency Practitioner (IP), often known as a trustee, will seize your assets and communicate with your creditors (the individuals you owe money).

Minimal Assets Process (MAP) bankruptcy

The Minimum Asset Procedure (MAP) is a method of filing for bankruptcy designed for those with a low income and few or no assets. It is a way of writing off debts that you would struggle to repay in a reasonable amount of time.

The majority of debts are written off in MAP bankruptcy. Certain debts, however, are not covered, including court penalties, student loans, child maintenance arrears, and debts obtained unlawfully. You must continue to pay them.

If your application is granted and you continue to comply with the MAP bankruptcy terms, you will typically be released six months after the bankruptcy is granted.

If you reside in England, Wales, or Northern Ireland, you are not eligible for the MAP bankruptcy. While a DRO is a close alternative, it is essential to recognise that it comes with distinct advantages, risks, and expenses.

What Happens After a Debt Is Written Off?

Debts that are completely forgiven are deemed settled. You will no longer be regarded liable for payment, and the firm or creditor cannot pursue you. While the debt will appear on your credit record, it will be listed as paid and should not affect your credit rating.

If a creditor agrees to write off a portion of your debt, you will still be required to pay the remaining balance through a reduced monthly payment or a lump sum.

A partial debt write-off may appear on your credit report as partly resolved, which may temporarily negatively affect your credit file and make it more challenging to get credit in the future. However, the debt will remain on your credit history for six years, after which you will be allowed to start again.

Call us on 0800 464 7235

Our trained advisors are here to help, so if you think an IVA proposal is one of the best debt solutions for you, don’t hesitate to call us on 0800 464 7235 to speak to one of our trained debt advisors or click below to see if you qualify…

Check if you qualify

Where To Get Expert Debt Advice

Consult an insolvency practitioner for guidance and assistance at IVA Helpline; your practitioner will be able to determine how much you can afford to repay. You will be required to provide information about your financial condition, including your assets, liabilities, income, and creditors.

Your bankruptcy practitioner will also contact creditors. The IVA will begin if 75% of your creditors consent to it, and it will be binding on all of your creditors, even those who objected. An IVA will prevent your creditors from pursuing you for your debts.

Contact the IVA Helpline on 0800 464 7235, email us at or visit the IVA site for help and advice regarding your debt.

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Final Thoughts

If you cannot pay your bills, you should contact your creditor to inform them of your situation and see if they can forgive the amount.

Your second choice, which may seem more appealing, is to choose a debt solution that results in the cancellation of part or all of your debts. Depending on your own financial state – and future ambitions – this may not always be the optimal debt option for your circumstances. To identify the best debt-reduction option, call the IVA Helpline helpdesk.

Frequently Asked Questions

  • How does a debt write off affect your credit score?

    When creditors agree to forgive debts, the sum is usually reset to zero and marked as either completely settled or written off on your credit report. If they do so, the total amount of unpaid debt on your credit history will decrease, which should positively influence your credit rating.

  • Can a bank write off debt?

    The loan is written off when a bank determines that you will never pay, and this has no bearing on your duty to repay the amount. The bank may continue to pursue collecting unpaid bank debt or may refer them to a debt collector.

  • Can I ask for my debt to be written off?

    Persuading a lender to forgive a debt owing to them is not simple. However, some individuals have successfully convinced lenders to forgive debts by justifying their circumstances. You will not always be successful, and the lender’s answer may vary. Some lenders may deny your request, while others may be more receptive.

  • What is the difference between a debt write-off and write-down?

    A write-down lowers the tax and accounting value of an asset, yet the asset retains part of its original worth. A write-off eliminates an asset’s current and future worth, and it zeroes out its value.

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