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Can I Write Off My Debts?

If you’re in debt, it can be tempting to look for a way to write it off. Read on to find out more about whether writing off debt could be right for you.

Writing off debt refers to the process where a creditor, such as a bank or credit card company, deems a debt uncollectable and removes it from their balance sheet. This usually happens when the debtor is in a severe financial situation that makes the repayment of the debt highly unlikely. It’s important to note that it may still appear on your credit file as an unpaid debt; however, after it is written off, you will not be chased for payment.

Can I Have My Debts Written Off?

In the UK, having your debts written off is not a straightforward process and is usually the last resort. It’s not as simple as asking your creditors to write off your debts. However, there are certain situations where you may be able to have your debts written off.

Circumstances for Debt Write-Off

  • Insolvency: If you're declared insolvent, some of your debts may be written off upon completion of a debt solution. This includes solutions like Individual Voluntary Arrangements (IVA), Debt Relief Orders (DRO), and bankruptcy.
  • Statute Barred Debts: In the UK, a debt is considered 'statute barred' if a creditor has not been in touch to recover the debt for a specific number of years. However, the rules around this are complex, and it doesn't apply to all types of debt.
  • Full and Final Settlement Offers: If you have a lump sum that could cover a portion of your debt, you could offer this to your creditors as a 'full and final settlement'. If they accept, the rest of your debt could be written off.

What Are the Consequences of Writing Off Debt?

While having your debts written off can provide relief, it’s not without consequences. Your credit score will be negatively impacted, making it harder to obtain credit in the future. If you go bankrupt, you may have to sell off your assets to pay back your creditors. Applying for insolvency solutions like bankruptcy or a DRO comes with a cost.

The Personal Impact

Beyond the financial implications, writing off debt can also have personal consequences. Bankruptcy comes with several restrictions, such as not being able to act as a company director and having strict restrictions of further credit applications. The long-term commitment can also feel burdensome and limit your financial flexibility. It’s important to consider these factors before deciding to write off your debt.

How Can I Improve My Financial Situation?

If you’re struggling with debt, there are steps you can take to improve your financial situation. Creating a budget can help you understand where your money is going and identify areas where you can cut back. Prioritising your debts can also make a big difference. Not all debts are equal, and paying off high-interest debts first can reduce the amount you owe over time.

Seeking Professional Advice

Another crucial step in improving your financial situation is seeking advice from a debt advice service. They can provide you with information about potential solutions you may not have considered. This could include debt management plans, debt consolidation loans, or insolvency solutions like an IVA or DRO. Remember, it’s okay to ask for help, and there are many resources available to you.

How Consolidation Expert Could Help

At Consolidation Expert, we understand that dealing with debt can be stressful. If you’re struggling with debt, a consolidation loan could help you to combine multiple high-interest debts into one loan with a single affordable monthly payment. Apply today with Consolidation Expert – our lenders consider a wide range of credit scores.

Representative 14.8% APR

We are a broker, not a lender.

Representative Example: Borrowing £15,000 over 60 months, repaying £355.28 per month, total repayable £21,316.57.

Total cost of credit £6,316.57.

Interest rate 14.8% (variable).

The lenders on our panel offer loans for 12-360 months, with rates from 4.7% APR to 42.6% APR.

The Representative Example is based on all loans paid out by lenders between 1st Jan 2022 and 31st Dec 2022.

Conclusion: Is Writing Off Debt the Right Solution for You?

Writing off debt is a serious decision that comes with significant consequences. It is usually only considered as a last resort, and it is important to seek advice from a debt professional before choosing to write off your debt. But remember, there is help available, and you don’t have to deal with debt alone.

Further reading

Read Is it Possible to Consolidate Short-Term Same Day Loans?
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Read Can I Consolidate Holiday Loans with Other Debts?
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Read How Can I Pay Off My Debts Faster?
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