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How to Write Off Debt Legally – 5 Options Explored

Write Off Debt Legally

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

Do you want to know how to write off debt legally? So do lots of other people in debt – and we have accurate answers in this guide. Uncover the five ways that people manage to wipe away some or all of their debts with us.

Our friendly guide could save you money!

Don’t worry, here’s what to do!

There are several debt solutions in the UK that can be used to improve your finances. Choosing the right way to tackle your debt could save you time and money, but the wrong one could cause even more harm

It’s always best to find out about all your options from a professional before you take action.

Fill out the 5 step form to get started. 

What Is Writing Off Debt?

Writing off debt is when you have a debt that no longer has to be paid. Although writing off debt can give you peace of mind and help you sleep again, it does come with some downsides. Written off debt will be on your credit file and could prevent you from getting more credit, a phone contract, a tenancy agreement and even a mortgage. 

Because the debt was written off, it shows that you were unable to repay the money you owed in full and may cause others to not want to lend to you. However, these drawbacks are a minor concern for many people who are struggling and just want to escape their debts in the immediate future. 

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Is It Possible to Write Off Debt?

As you might have guessed, it is possible to write off debt. Sometimes you can write off everything you owe, while in other situations you can write off a percentage of your debt. 

Although writing off debt is possible, it is not always possible for everyone and not recommended to all debtors. 

How to Write Off Debt Legally

If you want to know how to write off debt legally, we have four ways you can do it below. Not everyone is able to use all or any of these methods. But for some people writing off some debt is a realistic possibility. 

Before considering these options, you could try writing to your creditor to ask for your debt to be written off using our free letter template.

Creditors are under no obligation to write off your debt so if denied, you should then consider one of the following options:

  1. Debt Settlement Offers

A debt settlement offer is an offer made to your creditor asking for them to clear the debt with the amount offered. This often means offering less than you owe and having the rest of the debt you owe wiped.

For example, you might have a debt of £1,000 and make a debt settlement offer of £750. If they accept, you pay the £750 and manage to wipe the other £250. Not every creditor will accept 75% of your debt and it all depends on your situation. 

  1. Individual Voluntary Arrangements

Another way to write off part of your debt, but not all of it, is with a debt solution called an Individual Voluntary Arrangement (IVA).

You may qualify for an IVA if you:

  • Have multiple debts
  • Have combined debts over £12,000
  • Can repay at least £100 each month (usually £200+ meaning you need to be employed)

The IVA is a legal agreement between you and your creditors organised by a certified insolvency practitioner. You must make monthly repayments for a fixed term, typically 60 months. At the end of this term, any debt you have not repaid is automatically wiped.

With an IVA, you might end up wiping up to 85% of all your debts!

  1. Debt Relief Orders

Another debt solution that can write off your debt (this time all of it!) is a Debt Relief Order (DRO). This is a debt solution for people who do not own a home, have less than £75 disposable income each month and have debts below £30,000. It is really for people who really can’t pay off their debts because they have low income.

The DRO will block creditors from trying to collect the debt for a full year. Once this year is up, all your debt can be wiped as long as your financial situation has not improved.

You can learn more about Debt Relief Orders in our friendly DRO guide!

  1. Statute Barred Debts

The other way to wipe of debt is through a legal loophole known as Statute Barred. In a nutshell, it is when debt is too old to be taken to the courts, and therefore, your creditors can never legally force you to pay.

In reality, your debts are not exactly wiped, but they may as well be wiped because you cannot be made to pay and you will never have to deal with bailiffs. 

For your debt to qualify for Statute Barred, it must be at least six years old. On top of this, it must not:

  • Have been repaid in part over the last six years
  • Have been issued with a CCJ
  • Have been acknowledged in writing by the debtor over the last six years

If you pay some of the debt off or acknowledge the debt in writing, the clock resets and you would have to wait another six years before it qualifies.

You can find out if your debt qualifies and can be ‘written off’ with the Statute Barred loophole by speaking with debt charities. If it does qualify, they can provide you with a letter to send to your creditors to inform them that they cannot collect the debt – and to leave you in peace.

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What About Bankruptcy?

Bankruptcy is the fifth option to wiping all of your debt, but it is undoubtedly the most serious of them all. Declaring yourself bankrupt is a serious decision and will have major implications for your long-term finances. It will create restrictions over the rest of your life.

However, bankruptcy is also a very smart and suitable option for people with debt they simply cannot escape from. Declaring yourself bankrupt is not always a bad idea and it could make your debt situation better.

If you do declare yourself bankrupt, it takes around one year for all your debt to be wiped. Don’t rush this decision and start by learning more about bankruptcy and the process involved. 

You Might Not Have to Wipe Your Debts!

If you are in debt and want to wipe it because you can’t afford to pay it back, there could be better solutions available. Some debt solutions allow you to make gradual repayments that are affordable to you.

By not wiping your debts you will safeguard your credit score and future plans for mortgages and other credit. 

Are you struggling with debt?

Affordable repayments

Reduce pressure from people you owe

Stop interest and charges from soaring

Get started


Are you struggling with debt?
Are you struggling with debt?
  • Affordable repayments
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring