Write Off Debt

Write Debt Off - Learn About Writing Off Debt

Please Also See The Following Related Pages:

Individual Voluntary Arrangements (IVAs)
Debt Settlement
How To Negotiate Debt

How To Write Debt Off

Anyone with serious debt problems will sooner or later need to find a way to deal with the situation and become debt free again. Being able to write off debt would obviously be an excellent start down the right road as this immediately reduces the size of the problem you have to deal with.

No creditor is just going to let you off with your debts for the fun of it, but there are well established systems in place in both the UK and the US for being able to write off a substantial proportion of your debts in certain circumstances. On this page I will take you through the options open to you for writing off debt, which will vary depending where you live.

Write Off Debt - The UK Options

In the UK there is a scheme that the government introduced as an alternative to bankruptcy, called an Individual Voluntary Arrangement or IVA. If you are eligible for an IVA you can enter into a formal agreement for a fixed period of time, where you make affordable payments towards your debts, and after that any remaining debt gets written off. Depending on your circumstances, the amount of debt written off can be as much as 70%.

You can find out more about how to get an IVA below, or on the main IVA UK page of this website. If you find that this is not an option for you, the only other possible way to write off debt in the UK is by reaching negotiated settlements with each of your creditors, more of which below.

Write Debt Off - The US Options

For US residents, an IVA is not an option, but there is a well established process known as debt settlement, which also sets out to help you write debt off. This involves the use of professional debt specialists to negotiate with all your creditors to reach agreements to settle your debts for far less than the full value. You can find out more below, or on the main Debt Settlement page of this site.

As in the UK, the only other alternative is to try to negotiate settlements yourself, rather than get a professional company to do it for you.

Writing Off Debt Using An IVA

Individual Voluntary Arrangements are legally binding agreements set up by specialist debt companies and not just anyone can get one. To be eligible for an IVA you must have at least £15,000 worth of unsecured debts to a few different creditors. You must also be struggling to keep up with repayments.

You need the creditors for at least 75% of your debts to agree to the IVA, which they are unlikely to do unless they can see that this is their best hope of getting some money from you. In other words if you actually have the money but just do not want to pay it back, you will not get an IVA because your creditors will not sign up to it.

You do not, however have to worry too much about the odd difficult creditor not wanting to join in just to be awkward, because provided 75% of your creditors agree, the remaining ones are legally bound to sign up too.

Most people who use an IVA are in very serious difficulty and are often considering bankruptcy. As it is a formal agreement and usually lasts for five years, it is probably not the best option if you think your circumstances might change in the near future. You will be asked to make a regular monthly payment based on what you can afford, and this will be shared out among your creditors. You keep on making this payment for the term of the IVA and at the end of the period you get to write off any debt that is left unpaid, and no-one can chase you for it.

Write Off Debt With Debt Settlement

As mentioned earlier, debt settlement as a widespread debt solution only really exists in the US. Professional companies will negotiate on your behalf to settle your debts for as small a proportion as possible. Being able to write off about 50% of your debt is fairly standard.

As with an IVA, your creditors are unlikely to play ball with the negotiator unless they believe that you really cannot afford to pay back the full amount, and that the choice is probably going to be a reduced amount or nothing. It is therefore unlikely to work unless your circumstances are pretty bad.

The process is not just about hard negotiation, it is much more about the settlement company’s understanding of how each of the creditors operate in terms of writing off bad debts. The settlements will take varying amounts of time, from a few weeks to a couple of years, depending on how each creditor operates.

One advantage of using an established settlement company is that the bigger ones have considerable leverage with most of the credit card companies, because they are negotiating on behalf of a lot of people. Because the amounts involved are so large, they are able to negotiate much better settlements.

Write Off Debts By Negotiating Settlements Yourself

The alternative to either an IVA for UK residents or debt settlement for US residents is to go it alone and take on your creditors direct. It is perfectly possible to be successful and write off debt in this way, but you are unlikely to be writing off huge amounts unless you have a good understanding of how the process works and how credit card companies and others approach these issues.

You can find out more about doing it yourself on the main How To Negotiate Debt page of this site, which also includes recommendations for some of the best Guides To Debt Negotiation.

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