If you’re struggling with debt and feeling like you’re running out of options, know that you’re not alone in your struggle. The reality is that most people are in debt, in fact, the average adult in the UK is in debt by £30,575, according to the Bank of England.
Luckily, though, there are many viable debt management solutions available to the public, some of which can result in a large percentage of your debt being scrapped. This may seem unlikely, but it is definitely possible to write off debt in the UK
In this article, we explore the various scenarios in which you can get your debt written off by your creditors.
Request to have a debt written off
This may not have occurred to some people, but if you have a debt that you cannot pay due to unforeseen circumstances, you can actually write to your creditor and request for it to be written off.
You may also be in a situation where your creditor is no longer allowed to recover debt from you because they exceeded the collection time-limit, which is 6 years. If this applies to you, then you don’t need to write to your creditors, as they are not supposed to be recovering money from you after 6 years.
You can learn more about writing a letter to creditors here.
DRO (Debt Relief Order)
This debt management solution is more severe than simply asking the creditors to write off your debt, as a DRO is for people who cannot pay their debts regardless. DROs are for people who have less than £30,000 in combined debt, don’t have any spare monthly income and don’t own their home.
If accepted, your creditors cannot legally attempt to collect money from you without a high court judgement, and your debts are usually written off after 12 months. Here, the UK government provides a list of approved debt advisers that can help you access a DRO if you think you might benefit from one.
IVA (Individual Voluntary Arrangement)
IVAs are usually the best way to get yourself out of debt, if you meet the criteria.
The process begins with an insolvency specialist evaluating your financial situation, then if you qualify for the arrangement and can meet its terms, the specialist speaks to your creditors and negotiates a deal.
Usually they involve you paying off a percentage of your debt over a 5 or 6 year period, after which the remaining balance is scrapped. This is one of the primary ways heavily indebted people avoid filing for bankruptcy. IVAs do take a toll on your credit score, but not nearly as much as bankruptcy.
The main benefits of IVAs are that the interest that is accruing on your debts freezes the minute the IVA is activated and creditors may wipe up to 90% of your debt.
Speak to an IVA adviser today to find out who qualifies for an IVA.