Money Wellness
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Debt write off: Can debt be written off?

If you’re unlikely to be able to repay your debt in a reasonable amount of time, it may be possible to get a debt solution that allows you to write off some, or all, of the amount you owe. This means you’ll never be expected to pay that money back.

In some circumstances, you may be able to get debt written off for medical reasons.

And if you have no contact with a lender about a debt for six years, that lender may be barred from taking court action to try and recover their money. Although this isn’t strictly debt write off, it probably means you won’t have to repay what you owe.

What is debt write off?

If you have debt written off, it means you don’t have to make any more payments.

How does debt write off work?

There are a number of ways you might be able to get your debt written off, including:

Debt solutions

If you’re unlikely to be able to pay what you owe in a reasonable amount of time, you may be able to apply for a debt solution that will allow you to write off some, or all, of your debt.

There are a number of these debt solutions available. Which, if any, are suitable for you will depend on your situation. We’ll go into more detail about each of these solutions later in this guide.

Dealing directly with lenders

If there are exceptional circumstances, you may be able to make an agreement direct with a lender to write off a debt in part or in full. To find out if this is an option for you, contact the lender in question.

Medical write off

Dealing with debt and illness at the same time can be challenging. If you’re in this position, it might be possible to get some of your debt written off.

Medical write off involves asking a lender to let you off paying outstanding debt in light of your physical health problems.

Requests are not guaranteed to be accepted. Some lenders may agree to write off your debt, while others refuse. To be considered, you’ll need to provide medical evidence of your condition.

That evidence must:

  • be dated in the last six months
  • be from a doctor or medical professional (such as a nurse or psychiatrist)
  • confirm your diagnosis
  • explain how the condition affects you
  • ideally be on letter-headed paper and signed by a medical professional

Indefinite hold

Sometimes when a lender refuses medical write off, they suggest an indefinite hold instead. This means the amount owed stays as an outstanding debt, but the lender stops chasing you for payment.

Debt and mental health evidence form

If a mental health condition has contributed to your debt problems, you can use a debt and mental health evidence form (DMHEF) to ask a health-and-social-care professional for information on your situation. This makes it easier to share that information with your lenders. Some lenders may write off debt based on mental health conditions. This can’t be guaranteed, and each lender will look at requests on a case-by-case basis.

Get more information and a copy of the DMHEF. Health professionals can’t charge for filling in the form.

Statute barred debts

In England, Wales and Northern Ireland, most debts become statute barred if there’s no contact between the debtor and the lender for six years. This means the lender can’t take court action to recover unsecured debts - like credit cards, overdrafts, store cards and bank loans - providing:

  • you haven’t made a payment in the last six years
  • you haven’t written to the lender admitting you owe the debt in the last six years
  • the lender hasn’t taken out a CCJ against you for the debt in the last six years

If you write to the lender admitting you owe the debt or make a payment towards the debt, the six-year period starts again.

Which debt solutions write off debt?

The following debt solutions may allow you to write off some, or all, of your debt in England, Wales and Northern Ireland:

Individual voluntary arrangement

An individual voluntary arrangement (IVA) is a legally binding agreement with your creditors to pay back your debts at an affordable rate. Most IVAs last for five or six years. After that time, anything you still owe is written off.

Debt relief order

A debt relief order (DRO) is a way to deal with debts if you:

  • owe £30,000 or less – this is increasing to £50,000 on 28 June 2024 
  • don't own your home
  • don't own anything of much value
  • have very little money left after covering essentials each month

A DRO lasts for 12 months. If your financial situation doesn’t get better in that time, the debts included in your DRO are written off.

Bankruptcy 

If you can’t pay your debts and the amount you owe is more than the value of your possessions, you might be able to declare yourself bankrupt. Anything of value you own, such as a house or car, may be sold to pay off some of your debts.

Bankruptcy usually lasts 12 months. After that, any outstanding unsecured debt you have is written off. You will only be asked to make payments towards your debts during bankruptcy if you can afford to.

Scottish debt solutions

There are different debt solutions available in Scotland.

Does writing off debt affect your credit rating?

Debt solutions usually stay on your credit file for six years. You’re likely to find it difficult to borrow during that time. Bear this in mind if you go down this route to write off some, or all, of your debt.

If your debt is written off for some other reason, it’ll usually be marked as paid on your credit report. But if you missed or made partial payments, or your account defaulted before the debt was written off, this will also be recorded on your credit report for six years. Again, this will make it difficult for you to borrow during that time.

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