Can Debts Be Written Off in the UK?

What "written off" actually means

A debt is written off when you no longer have to pay all or part of it. That can happen because a legal process ends your liability, because the creditor agrees to stop pursuing it, or because the law says it cannot be enforced. Write-off is different from a creditor simply stopping contact or passing the debt to someone else: the debt may still exist. Always get written confirmation that a debt is closed.

Route 1: A formal debt solution

Formal solutions can write off debts as part of a legal process.

See IVA vs DMP vs DRO vs bankruptcy and the guides to the IVA, Debt Relief Order and bankruptcy. A debt management planDebt Management Plan (DMP)A Debt Management Plan is an informal arrangement to repay unsecured debts at a monthly rate you can afford. Learn how DMPs work, who they suit and what to consider.Read more → does not normally write debts off, though creditors can agree to write off a balance at the end in some cases.

Route 2: The creditor agrees

Creditors can choose to write off debt, in whole or in part, when they think recovering it is unlikely or inappropriate. This is most likely when:

• You have no income or assets and no prospect of that changing
• You are seriously ill or vulnerable
• The debt is old or costly to pursue
• There was an error or unfair treatment by the creditor

Route 3: Reaching a full and final settlement

Sometimes a creditor will accept a smaller lump sum in full and final settlementFull and Final Settlement Offers on DebtHow to offer a lump sum to settle a debt for less in the UK: when it works, how to word the offer, protect yourself in writing and avoid scams.Read more → of a larger debt. The rest is written off. This works only if you have the money and the creditor agrees in writing. See full and final settlement offers before making any payment.

Route 4: The debt is unenforceable

Some debts cannot be enforced. For example, a debt may be time-barred under the Limitation Act in England and Wales if the creditor has not taken action or received a payment or acknowledgement for six years. That does not mean the debt disappears, but the creditor cannot win in court if you raise it as a defence. Be careful: acknowledging an old debt in writing, or paying a small amount, can restart the clock. See statute-barred debt. Other debts may be unenforceable because the creditor cannot prove them, because the agreement was unfair or because of procedural errors. A free adviser can check.

Route 5: Death and special cases

Debts are generally paid from a person's estate when they die, and family members are not usually liable unless they were joint debtors or guarantors. Some student loans are cancelled on death or serious disability. Other special cases include debts caused by fraud or identity theft, where you may not be liable at all. If you think you are a victim, report it and get advice.

What write-off does to your credit file

Even if a debt is written off, the record of missed payments and defaultsDefaultA default is a record on your credit file showing that you have seriously fallen behind on an agreement, usually after several months of missed payments.Read more → generally stays on your credit fileHow Credit Scores Work in the UKHow UK credit scores work: what the credit reference agencies record, what affects your score, why scores differ between agencies and what lenders actually see.Read more → for six years. A formal solution is recorded as well. See how credit scores work. Writing off the debt stops the pressure and may limit the harm over time, but it does not instantly clear the record.

Tax on written-off debt

In the UK, written-off personal debts are generally not treated as taxable income for individuals. Rules can differ in special circumstances, so if you have unusual debts or business borrowing, check with an adviser.

Getting help

Start with free advice from StepChangeStepChange Explained: What It Does and How It WorksWhat the debt charity StepChange offers, how its free debt advice and debt management plans work, who it suits and what to expect when you contact them.Read more →, National DebtlineNational Debtline: How It Works, When to CallWhat National Debtline is, who runs it, what it can help with, how to get free advice by phone, webchat or online tools, and what to expect.Read more → or Citizens Advice, who can tell you which route fits your situation. See free debt advice in the UK.

A worked example

Take three people. Maya has £14,000 of credit cardHow Credit Cards Work in the UKHow UK credit cards work: interest, APR, minimum payments, interest-free periods, fees, Section 75 protection and how to use a card without getting into debt.Read more → debt, a steady job and £250 a month spare: an IVA could write off part of it after several years, at a cost in fees. Leon has £6,000 of debt, no job, no assets and no spare income: a Debt Relief Order may write it off after a year if he qualifies. Grace is 78, has a small pension and owes £2,000 on an old catalogue account: she might ask the creditor to write off the debt on hardship grounds, with evidence. Three people, three different routes. This is why a free adviser should look at your own figures.

Questions to ask an adviser

Ask which write-off routes you might qualify for, what each would cost, how long each would take, what happens to your home and savings, how your credit file would be affected and what could go wrong. Ask them to put the options in order, from least to most drastic.