Many Trust Deed Scotland® customers who come to us looking for debt advice; often asking for more information on whether they can write off their debts.
Can You Write Off Debt without entering into a debt solution?
In some rare cases, you may find that creditors (the people you owe money to) may be willing to write off some or all of your debt if you can prove that is unaffordable for you and if you also have a terminal illness and your life expectancy is limited for example.
Alternatively, it’s a genuine possibility to write off debt after completing select debt solutions. In this article, we will explain the available debt solutions that can allow you to write off debt when you have unaffordable payments.
Debt Solutions That Write Off Debt in Scotland
The following are debt solutions available to Scottish residents. See below for how to write off debt in the UK.
Protected Trust Deed (PTD)
A Trust Deed is a legally binding agreement where, once completed, any remaining, qualifying and unsecured debts will be written off. A Trust Deed is completed after a typical repayment period of 4 years, with affordable monthly payments being paid towards your debt during this period.
Trust Deeds can only be arranged and administered by a licensed Insolvency Practitioner (IP), such as Trust Deed Scotland®, who will take on the role of ‘Trustee’.
Sequestration / Scottish Bankruptcy
Sequestration is the Scottish legal term for bankruptcy. Sequestration can be an appropriate solution for you if you are struggling with unaffordable debts. Sequestration is also used by creditors who take legal action against individuals for repayment of debts. If creditors have already commenced legal action against you, or you would like to get ahead of your debts now, please don’t hesitate to get debt advice. If you have a low income and have little or no assets, the type of Sequestration you would qualify for is known as the Minimal Asset Process route to Sequestration…
Minimal Assets Process (MAP) Bankruptcy
Minimal Assets Process – or MAP – is a route into Sequestration, for Scottish residents with a low income and few assets. With MAPs, you can write off your unsecured debts after 6 months; provided you have no disposable income, or your income is solely derived from social security benefits.
Debt Solutions That Write Off Debt in the UK
The following are debt solutions available to residents in England, Wales and Northern Ireland. Once chosen or completed these debt solutions, you will be able to write off remaining debt.
Bankruptcy
Write off unsecured debts if you can show it is unaffordable for you. You may have to sell assets such as a house or car.
Debt Relief Order (DRO)
UK residents must have a few assets to choose this debt solution, and usually opt for a Debt Relief Order when debt levels are relatively low.
Individual Voluntary Arrangement (IVA)
This is a formal agreement for those in England, Wales and Ireland to make affordable monthly payments to your debts. Often, lasting over 5 or 6 years.
Asking Your Creditors to Write Off Debt
Our customers come to us with unaffordable debt; finding themselves in financial difficulties for a range of reasons. Some reasons can be;
- Are unable to work
- Have a long-term illness
- Have low income or are unemployed
- Have went through a divorce or relationship breakdown
- Are struggling with the rising costs of living
- Found themselves overusing credit cards
If you’re struggling to pay off debts due to challenging circumstances, creditors may agree to write off your debts if:
- You provide proof of inability to pay
- You have no assets to sell
- It clearly isn’t worthwhile for them to keep chasing the debt
However, this is rare, as creditors will only do this for the most serious cases.
Before writing off debts, creditors may agree to stop contact for a period of time or agree to help if you have a mental health issue.
For help with debts from creditors regarding your mental health, provide proof with a Debt and Mental Health Evidence Form (DMHEF). This must be stamped by a professional such as your GP to be considered complete.
How Writing Off Debt Affects Your Credit Rating
Entering into any formal debt solution mentioned above will harm your credit score.
However, if you are continually missing payments already, your credit score is currently affected. There are many misconceptions about credit scores, so make sure you have all the facts before making a decision.
Most importantly, once you have written off debt, you can work on rebuilding your credit score. A bad credit score won’t remain if you take the steps to repair it and follow our tips on improving your credit score. With your debts written off, you will no longer miss payments that are harming your credit currently.
Tailored Debt Advice
“Can I write off my debt?” – our team of experienced debt advisers are happy to answer. After a discussion about your circumstances, Trust Deed Scotland® debt advisers can provide information of all the solutions available to you.
We are one of Scotland’s largest debt solutions providers, specialising in debt solutions such as Protected Trust Deeds, which allow you to write off debt once completed.
If you have debts mounting up and are unsure what to do, please reach out. We are here to help. Our team of experienced debt advisers ensure you have all the information to make the right decision for your circumstances and needs.
Contact us through WhatsApp Service, or by calling 0141 221 0999.
Alternatively, try the Trust Deed Wizard® tool to quickly check your eligibility online.