Write off Debt – Explained

If you’re looking for a way to write off some debts you can’t afford to pay back in full, we’ve created a guide which explains how much unsecured debt you could write off with different debt solution options.

Some solutions promise that you can write off 100% of your debt – while everyone’s circumstances are different, usually you can only write off all of your debts through solutions such as bankruptcy. However, using an IVA, we can help you repay your unsecured debts in affordable monthly payments and write off the rest upon successful completion of the IVA.

If an IVA is right for you, you may be able to write off substantial amounts of what you owe. Our customers expect to be able to write off, on average, £10,500* of unsecured debt.

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* Average unsecured debt anticipated to be written off for IVAs approved between 1 January 2020 and 31 December 2020 is £10,568, based upon successful completion.

How to write off debt with an IVA

An IVA is a legal agreement between you and your creditors. It generally lasts up to five or six years and is designed to help repay what you can through affordable monthly payments. When the arrangement ends, any unsecured debts in the IVA which aren’t repaid are written off.

You can estimate how much debt you could write off with this solution using our IVA calculator.

Can you write off debt with bankruptcy?

Although with Bankruptcy you can write off almost all of your debts, this is a major decision as your assets will be controlled by the Official Receiver who will look to use them to repay as much of your debt as possible. Therefore, if you own a home, this could be sold to raise funds for your creditors, however it depends on the value of your property and the level of equity in it.

Other debt solutions such as an IVA which help you to repay your debts affordably may be better for your circumstances. If you’d like some more information on the right debt solution for you, you can get in touch via our application form and tell us you circumstances.

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Can you write off debt without affecting your credit score?

In theory, if your debts were written off, this wouldn’t have much of an impact on your credit score as what you owe would effectively be paid. However, what would have an effect is the method used to resolve your debts.

For example, an IVA is entered on your credit file for six years from the date it is approved and will demonstrate to your lenders that you’ve had problems repaying what you owe – although you’re taking steps to resolve the matter. This information will eventually disappear from your file (usually after a further year following completion, if your IVA was a five year term), but, in the meantime, you’ll find it hard to obtain financial products. Therefore, it’s likely writing off debt via this method will have an adverse effect on your credit score in the short term.

However it’s important to note that having debts which you are struggling to repay with missed payments will also likely to be affecting your credit score – many people find that having an IVA is a better long-term solution for them than having several unaffordable unsecured debts with multiple creditors. After your IVA is complete and has been removed from your credit file, you can start to rebuild your credit and may improve your credit score in the long-term.

Writing off debt under “exceptional” circumstances

One potential solution to writing off your debt is if you have experienced an “exceptional” change in circumstances. If this incident means your life won’t get back to normal soon (or ever) you could request that your debts are written off.

You’ll need to contact your creditors directly and, in the above situation, these firms will probably request proof of your condition – and evidence it prevents you from working.

However, this is up to the creditor’s discretion and – consequently – they might not agree to write off your debts.

If this isn’t a suitable option for you, you can contact us below to tell us your situation and we’ll help you with a solution that’s personal to you.

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What debts can you write off?

It’s possible to write off most forms of unsecured debt in an IVA.

Any accounts in arrears which are secured against an asset – for example, a mortgage, usually cannot be written off. There are also a few notable types of unsecured debt to mention which are frequently asked about:

Council tax

Depending on who your local authority is, it may be possible to write off council tax debts. However, as the consequences of missing a payment can be harsh and may escalate quickly, you’ll have to act very fast to find out whether your council will agree to write off debt.

Student debt

Student debt is eventually written off if it isn’t repaid within a certain amount of time. This is generally up to 30 years after you originally took out the student loan and therefore cannot usually be included in an IVA. However, there are exceptions to this rule.

If you are unsure if your type of debt can be included in an IVA contact us so we can help with this.