IVA

Write off Debt – Explained

Write off Debt – Explained

Some groups promise to write off 100% of your debt – realistically this isn’t possible. We’ve explained all you need to know about writing off debt here.

You hear someone promising to write off debt and it usually sounds almost too good to be true. At the very least, many of these messages make the act sound as easy as filling out a form.

Through solutions such as an IVA, we can help you write off debt. However, we aren’t like these other companies making unrealistic promises – the fact is, you certainly cannot write off 100% of what you owe without serious consequences.

Through this solution, you can write off substantial amounts of what you owe – providing an IVA is right for you.

How to write off debt with an IVA

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

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

How to write off debt with bankruptcy

With bankruptcy, you really do write off almost all of your debts. However, this is a major decision as your assets and finances will be used to repay as much of your debt as possible. Therefore, if you own a home, this could be repossessed to raise funds for your creditors.

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 would be detailed on your credit report 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 but, in the meantime, you’ll find it hard to obtain financial products.

Therefore, it’s unlikely writing off debt will have a positive impact on your credit score – at least in the short 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.

For example, in the event of a severe illness.

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.

What debts can you write off?

It’s possible to write off most forms of unsecured debt. This means any accounts in arrears which are secured against an asset – for example, a mortgage, usually cannot be written off. There are a few notable types of debt to mention though:

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.

Best thing to do in this situation is to speak with a specialist debt advisor.

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 loan. However, there are exceptions to this rule.

Any more questions about debt write off? Get in touch

Debt write off is something which isn’t as easy as many organisations make it seem. The good news though is that we’re here to help make sense of it all. If you want to find out how much you can reasonably expect to write off, then we can provide you with an honest estimation.

To find out more, get in touch with us today. We’ll be happy to assist.

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