What Is Debt Write Off? How To Write Off Debts. StepChange (2024)

Insolvency is a way to write off debts. Read our guides to learn about the different benefits, risks and fees for each.

Insolvency solutions: England, Wales and Northern Ireland

• Bankruptcy:
  • Writes off unsecured debts if you cannot repay them
  • Any assets like a house or car may be sold
• Debt relief order (DRO):
  • Writes off debts if you have a relatively low level of debt
  • Must also have few assets
• Individual voluntary arrangement (IVA):
  • A formal agreement
  • You to make affordable payments to your debts over five or six years
  • You can also make a one-off payment to shorten the IVA

Insolvency solutions: Scotland

• Sequestration, or Scottish bankruptcy:
  • Writes off unsecured debts if you cannot afford to repay them
  • Any assets like a house or car may be sold
• Protected trust deed (PTD):
  • A legally-binding agreement
  • You make lower payments over four years
  • Some debts are written off at the end
• Minimal assets process (MAP) bankruptcy:
  • Another type of bankruptcy
  • For people with a low income
  • Must not have many assets

Insolvency measures protect you by law.

• Insolvency is legally binding
• The people you owe usually cannot take action to get their money back.

There are risks though.

• You may have to pay a fee
• You may be asked to sell your house or car
• There will be a negative effect on your credit file

Find out about the different debt solutions.

Many clients cannot afford to pay anything towards their debts.

This may be because:

• They cannot work for a long time
• They have a long-term illness

You can ask the people you owe to write of your debts if this sounds like you.

Some creditors may agree if:

• They understand you will not be able to pay
• They see you have no assets to sell
• You show it is not worthwhile or fair for them to keep collecting the debt

The people you owe usually only agree to write off debts in the most serious cases. They will ask for proof of your illness or injury.

They might agree not to contact you for a while, even if they do not write it off.

They may also be able to help you if you are dealing with a mental health issue.

• Send them a debt and mental health evidence form (DMHEF).
• This has to be signed by a health or social care worker

Find out more about debt and mental health.

Tell us your situation when you get debt advice. We can help support you.

It is marked in your credit file as paid.

But any missed or lower payments and defaults are on your file for six years.

Your credit file is marked with a 'partial payment' if you settle part of debt.

The people you owe may not accept your offer.

• It depends on how much you can pay back
• They are more likely to agree to a partial settlement than writing off the whole balance