Can You Really Write Off Debt?

The truth is that many people are misled by the thought they can simply write off debt. When in truth, not everybody can, or would want to enter a solution where they repay a proportion of the debt they owe. There are some debt solutions where you can write off the debt you cannot afford to repay so we’re going to explain when and why you would want to enter these solutions and also who would not be applicable.

To check if you qualify for a debt write off solution call 0800 085 0226 and a charity adviser will help you. Alternatively, please complete the debt analyser below.

Debt Solutions to Write Off Debt

Our charity receives thousands of calls from people in need of debt advice and each person is provided with tailored debt advice. Everybody wants to be debt free again but in some instances, people specifically want to write off their debt.


The solutions where a person may not repay all of their debt would be insolvency solutions. The solution would last for a fixed period of time and at the end of the solution any debt not repaid would be written off.

The debt solutions where this would happen would be an IVA, Trust Deed in Scotland or Bankruptcy.


When entering an insolvency solution, like an IVA, bankruptcy or a Trust Deed in Scotland, you must remember that assets are considered too. So, if you owe a car which has equity in it, usually above £3,000, or if you have equity in your home then this would be reviewed under an insolvency solution.

Debts Written Off

There are several solutions to debt which should be considered, but not all will write off debt. At Debt Support Trust we always explain why we would not recommend a solution as well as providing you with information on every available debt solution for you.

An example of an insolvency solution where debt may be written off would be if a husband and wife, living in England, collectively owed £40,000. The husband works while the wife cares for the 3 young children. The household has an income of £1,700 after tax every month and they live in rented accommodation. The family have no assets with any equity. The family expenditure every month is £1,400. The family is contracted to pay £800 every month in repayments to their debt, however they only have £300 available. This means each month they are getting further and further into debt and can’t get debt free.

The indebted individuals would be able to enter a debt solution which would enable them to repay a percentage of their debt with any remaining debt being written off.

A debt management plan would last for 11 years at best. This debt solution would mean all of the debt would be repaid with no debt written off.

An IVA is a debt solution which is suitable for the couple. They could jointly enter the solution and make a £300 payment towards their debt for 5 years. At the end of the solution any debt which had not been repaid would be written off.  Over 5 years the couple would repay £18,000. The licensed insolvency practitioners would take their fees from this money and the remaining money would be shared amongst the creditors. All interest and charges would be frozen in an IVA and written off at the end of the solution as long as the monthly contributions were paid as per the arrangement.

Bankruptcy would also be applicable for the couple but would be entered individually. The husband would most likely be asked to make regular monthly payments in bankruptcy towards their debt. Because the wife is not working and is in receipt of benefits she would typically not be asked to make any monthly payments. If the couple did not qualify for a debt relief order then the cost to enter bankruptcy is £700 each. The bankruptcy would last for one year but the monthly payments would last for three years under what is known as an Income Payment Order. Any debt which had not been repaid would be written off at the end of the solution.

The debt management plan, IVA and bankruptcy would have a negative impact on a person’s credit file, so this should be considered too before entering any debt solution.

If the couple lived in Scotland then they may be suitable for a Trust Deed. The couple could not enter a joint Trust Deed in Scotland so it would have to be two separate Trust Deeds. But, this would depend on the split of debt and it may be that the couple should enter different debt solutions.

When Would Writing Off Debt Not Be Suitable

The IVA or Bankruptcy may be the best solution for some people but in many cases we as a charity advise against it. This is because financially it doesn’t make sense.

Under an IVA or Bankruptcy any equity in an asset must be released and passed to the insolvency specialist. So, if the couple above were living in a mortgaged property where the mortgage was £100,000 but the property was worth £250,000 then there would be £150,000 worth of equity. If the debt was £40,000 then Bankruptcy or an IVA would not be the right solution. Instead the best advice would be a debt management plan or to sell the house and downsize to repay all of the debt.

There would not be the opportunity to write off debt in this instance because the couple could reasonably afford to repay all of their debt.

Frequently we hear from people who have been advised to enter an insolvency solution and told they can write off their debt. The fact is that for many people it’s not the right advice and could see them lose their assets.

If you’ve been told you can write off debt but you’re not sure if it’s the correct advice then get a second opinion from a charity. You can call Debt Support Trust on 0800 085 0226 or alternatively you can visit your local Citizens Advice Bureau for face to face debt help.

If you need help to decide which debt solution is best for you then why not complete our confidential online debt analyser. After completing the questionnaire which lasts for approximately 10-15 minutes it will give you a better idea which debt solution route is right for you.