How Do I Write Off My Debt?
When talking about writing off debt, this refers to debt solutions that either fully settle your debts or have them partially written off. As you can imagine, this is usually a last resort for many people and creditors if they can’t recover the money owed and a borrower can no longer afford to maintain it. There usually needs to be a very good reason for wanting to write off debt and you would need to prove to your creditors why you would need to. As this can be difficult, this is where there are options to help you convince creditors this is the best option. These include in the UK:
- Debt Relief Order (DRO)
- Individual Voluntary Arrangement (IVA)
These options avoid the borrower having to negotiate directly with the creditor they want to write off debt with, which can be daunting to do, and you may not be fully informed on the legalities of doing so. Any of the above insolvency measures are a legally binding contract which means once agreed, creditors cannot do anything further to recover the funds from you. However, being able to legally write off debt does have disadvantages too.
What Happens After Having Bad Debts Written Off?
If your debts are written off, whilst this will leave you with nothing to owe your creditors, it will mean you:
- Will have difficulty applying for credit again in future – sometimes for up to 6 years
- Your credit rating will be negatively affected, and your credit report will be marked with the write off.
- The written off debt will be marked as a default
There is also the possibility that your creditors do not agree to writing off the debt and instead may agree to a different solution. For example, they may agree to hold off any further action on the outstanding debt for a certain amount of time or stop contacting you. However, this doesn’t mean the debt has been settled and means the creditor may start pursuing the money again in future. If they agree to a partial write-off, this will mean that some of the balance is reduced, and you will agree to repay this for a limited amount of time.