Tackling your debts

Debt write-off – too good to be true?

Posted 08 February 2017

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You may think the idea of all your debts being written off is too good to be true. In reality, it can be an option – find out more here.

Does it feel as though you’ll be paying off your debts forever? If you’ve heard about debt write-off, it may seem like the answer you’ve been looking for.

But is all as it seems? Can a debt solution really write off your debts – and is there a catch?

The good news

The answer is – you may be able to have some or all of your debts written off. There are a number of debt solutions that allow an element of debt write-off, but in most cases you’ll be asked to repay as much of your debts as you can afford to.

That’s why there’s no set amount of debt that will be written off - it will always depend on your circumstances. So if you’ve seen an advert promising to wipe a large set percentage off your debts, take care. The amount that can be written off all depends on your unique situation – there’s no guarantee it will be the amount you’ve seen advertised.

Let’s look at the options if you live in England, Wales or Northern Ireland:

Individual Voluntary Arrangement (IVA)

You make new, affordable, repayments to your lenders for five or six years. After that time, what’s left of the debts in your IVA are written off. Homeowners who start an IVA are usually able to keep their home.

An IVA is a legally binding arrangement so if it’s accepted, your lenders have to stick to it. And with an IVA, you could also freeze all interest and charges on your debts, so you know that you’re clearing what you owe faster.

Debt Relief Order (DRO)

This is an alternative to bankruptcy that can freeze your unsecured debts for 12 months. You may qualify for a DRO if your monthly disposable income is less than £50 and you have few or no assets. If your circumstances haven’t improved over the year, the debts are written off. There is a fee of £90 to enter a DRO.


This insolvency solution usually lasts 12 months. After the year has passed, you’ll be discharged, at which point any remaining unsecured debts are written off. As part of this, the Official Receiver will arrange for some of your assets to be sold so the money can be put towards your debts.

The fee to go bankrupt is £680, but you can pay it in instalments. If you can afford to, you may also have to pay into your bankruptcy, usually for three years, unless your income primarily comes from benefits.

What’s the catch?

There are pros and cons to every debt solution. For example, they will all impact on your credit history for at least six years, which will make it difficult to borrow in the future.

That’s why it’s important to get proper debt advice to help you choose the right solution for you – which may not be listed here.

Be aware there are some debts that can’t be written off using any debt solution, including mortgages, court fines and child maintenance payments.

But having said all that, one of the options above could allow you to get your finances back under control and let you make a fresh start with your money.

by Kyri Levendi

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.