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Creditors are only obliged to write off debt when you become insolvent.  Depending on your situation, however, it may be possible to agree to get a lender to write off some, or even all, of a debt without going down that path.

You cannot get a debt written off by ignoring it

In very particular circumstances, a debt may become “statute-barred”.  What this effectively means is that it is considered to be so old that a creditor is forbidden from taking action to collect it.  This is not, however, the same as it being written off.

For practical purposes, the key difference is that the creditor can still leave a marker on your credit file.  This can have significant implications not just for your ability to get credit, including contracts which allow payment in arrears.  It can also impact your ability to rent a property and even your ability to get certain jobs.

They may also be able to make your life uncomfortable, within legal limits.  For example, they can refuse to do business with you again and may have you blacklisted around their industry.  This means that, if you can afford it, you may find it best to pay a debt even if it is statute-barred.

If you try to ignore your creditors you may make the situation worse

If you respond to your creditors and try to work with them, you may be able to come to a solution which works for both of you.  If, however, you just ignore them, they may become concerned enough to start legal proceedings against you.

You may be able to have all or part of a debt written off by negotiating with your creditors

Assuming you want to avoid insolvency, the only way to have a debt written off is to persuade your creditors to do so.  You do not have to negotiate with them yourself.  You can use a debt help company to assist.  In fact, some creditors may insist that you do so.

Regardless of whether you negotiate with your creditors yourself or if you use debt help, you’re going to have to show your lender a reason why they should write off your debts.  In very blunt terms, you’re going to have to demonstrate to your lender that they’ll gain nothing from either trying to collect the debts or forcing you into insolvency.

Logically, this means that the less income and fewer assets you have, the more likely it is that your creditors will simply accept reality and write off the debt.  It is, however, far from guaranteed that they will do so.

Alternatives to having all or part of a debt written off

Even if creditors refuse to write off your debt, it may not be the end of the line.  If you’re in financial difficulty, there may still be other ways they can help, especially if you specifically ask them.

For example, if you have a long employment history, but are currently out of work, your lender may refuse to write off your debt because it thinks that your situation may only be temporary.  It may,  however, be prepared to offer you a payment holiday.

Alternatively, if you have experienced a drop in your income, then your lender may be prepared to reduce or freeze interest while you go on repaying the principal.

If your lender does grant you any form of assistance, it will probably be on a temporary basis and you will be expected to inform them if your circumstances change.  After the agreed period is up, you and your lender will need to agree on a way forward.

If you need help or would like us to act on your behalf, please contact us.

Blackpool: 01253 299 399 | Carlisle: 01228 558 899