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Write Off Debt

If you’re struggling to repay debts, you might be wondering if there is a way to write some or all of them off. In certain instances, creditors might agree to do this, but it is all dependent on your particular situation. The important thing is to be aware of your rights and to understand your options.

At Galahad & Co., we will provide you with the expert legal advice you need to make sure your interests are protected.

Will creditors write off my debts?

It’s not common for creditors to write off debts, but it can happen in exceptional circumstances. For example, if you have no money to spare to make repayments, lenders may agree to write off what you owe. In rare cases, they may agree to stop action against you altogether. However, creditors will generally only consider this if you fall into a ‘vulnerable’ category, for example if you have a low income and your financial, or personal, situation is particularly difficult. This may be because you are no longer able to work due to a disability or you have been diagnosed with a terminal illness.

In cases like these, creditors might agree to write off debts because they understand they are not likely to get any money from you. This generally only happens if you don’t have any assets that could be used to repay the debt. 

Before they agree to write a debt off, lenders will usually ask for proof of the difficulties you’re having. For example, if you have been diagnosed with a serious or terminal illness, they may ask for medical evidence that proves this or shows you cannot work.

In practice, rather than writing debts off completely, lenders are more likely to agree to write part of your debt off (typically the interest and charges), with you agreeing to repay the remaining amount in a lump sum or over a period of a few months. This is called a full and final settlement. Another possibility is that the creditor will agree not to get in touch with you about a debt for a certain period of time, referred to as putting the account on hold. 

The Financial Conduct Authority (FCA), which is the regulator for the financial industry, is particularly keen to ensure that lenders are ‘treating customers fairly’. The FCA Handbook sets out (in great detail) how lenders must do this. Lenders are most likely to consider writing off all or part of your debt where this would be in the interests of treating you fairly. Examples include where repaying the debt now or in future is likely to mean you are unable to afford the basic living expenses of your family. This would also cover instances where lending the money in the first place was against the FCA guidance and repaying the debt has never been affordable to you.  

Can writing off debt impact my credit rating?

If a debt is written off in full, it is usually recorded in your credit history as paid. However, if you paid less than the contracted agreement, your account had defaulted or you missed any payments, this is recorded on your credit file – and will stay on record for six years.

If creditors agree to a full and final settlement, this will be recorded in your file as a partial payment. It is important to note that only debt which is written off, or paid back, in full will be removed from your credit report. A partially settled default will still show on your records for six years from the date of default. 

Using insolvency solutions to write off debts

Another option if you are considering how to write off debt is to use an insolvency debt solution, although this should only ever be considered as a last resort. Depending on your specific circumstances, your options may include bankruptcy, a debt relief order (DRO) or, in very rare cases, an individual voluntary arrangement (IVA) may be appropriate. These measures are legally binding and can be an effective way to clear your debts, but they come with certain drawbacks – and all of them will have a significant impact on your credit record.


You can apply to a court for bankruptcy if you have debts that you can’t afford to repay. This process involves a court granting that your debts are written off (discharged) in exchange for your assets. One of the advantages of this approach is that it can put a stop to creditors chasing you for repayment and adding charges and interest to your debts. Bankruptcy normally lasts for a year and, during this time, you will need to cooperate with the courts and your trustee. Once your bankruptcy ends, you won’t have to repay any unsecured debt. This can help to give you a fresh start. However, if you own a property, you may lose it – and you might also lose other possessions that are not essential for your work or for your family to live. You might also be barred from being a company director or from working in certain professions.

Debt relief order

A DRO is similar to bankruptcy but it is intended to be cheaper, faster and simpler. It may be a suitable option for you if you have debts under £20,000 that you can’t afford to repay. These agreements will stop creditors from chasing you and, once they are lifted, they allow you to make a new start free from your debts. Most DROs last just one year. Like all insolvency debt solutions though, DROs will have a negative impact on your credit rating. As with a bankruptcy, you will need to comply with various conditions for the duration of your DRO. For example, you won’t be able to be a company director.

Individual voluntary arrangement

Under an IVA, your debts will be frozen and you will agree to make repayments over a set period of time (usually five to six years). Any outstanding debts after this period are then written off. You can apply for one of these agreements if you can afford to repay some of your debts but not the full amount. In order to be accepted for an IVA, you will need to demonstrate that you have a regular long-term income. The agreement will be set up by an insolvency practitioner, who will work with you to put a proposal together for your creditors. IVAs last for much longer than other insolvency debt solutions and they commit you to making repayments over a set period of time. You also have relatively little control over the payments you will need to make during this period and the insolvency practitioner’s fees tend to be very high.

Is my debt statute barred?

For most debts, creditors have to take action to reclaim the money within a certain period of time. The time limit (also called the limitation period) is six years for most debts, and this starts from the last time you made a payment or wrote to your creditor acknowledging the debt. Outside of this time limit, debt becomes statute barred.

Your debt may fall into this category if, during the limitation period, you haven’t made any repayments, you haven’t written to the creditor saying you owe the money and the creditor hasn’t gone to court to chase you for the debt. Importantly, you must not have acknowledged the debt in writing for it to become statute barred. Verbal conversations will not impact the account status.

If you know a debt is statute barred but a creditor tries to seek repayment, you can write to them asking them to stop contacting you. Make sure you state that you do not admit liability for the claim. If the lender continues to seek payment, they must go to court to prove the debt isn’t statute barred.

Bear in mind that being statute barred doesn’t mean that a debt doesn’t exist. It can still appear on your credit file, and creditors can still try to recover the money in certain circumstances. The FCA is very strict about the treatment of statute barred debt though and your creditor will not often be allowed to chase you for what they claim you owe.

How Galahad & Co. can help

At Galahad & Co., we’re here to make sure you understand your rights concerning debt and can protect your interests against creditors who may try to exploit you. When it comes to debt, you should never pay anything unless you’re certain that the company claiming the money can prove you owe what they say you owe.

So far, we have helped our clients to escape in excess of £3 million of unsecured debts. If you think you could benefit from our services, don’t hesitate to contact us today. You can reach us by phone on 0330 124 4252 or via email at to arrange a free, no obligation consultation.

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In situations where you may have been struggling to meet debt repayments and have missed payment deadlines the company with whom you took out the debt will often sell it on to a third party who will then, using a variety of techniques, chase you for the outstanding amounts.


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