How to write off debt

If you feel out of control when it comes to debt, you must remember that there are debt solutions available to you. At Baines & Ernst we can help you find the right one to overcome your money worries and avoid your unsecured debts becoming bad debts.

Circumstances in which lenders may write off debt

1. Getting unfair debts written off by the courts
This applies when the terms of the debts are considered grossly unfair, in the same way that a contract can be considered unfair in a court of law. This type of write-off is reserved for extreme cases. For example, you may have paid interest rates and charges that were disproportionate to the loan taken out or the lender may not have informed you about the total cost of the credit you took out with them.

2. Debts written off as part of an IVA
One of the most effective ways to pay and write off debt is to enter an Individual Voluntary Arrangement (IVA), which is a legally binding contract that offers protection to you and the creditors you owe money to.

IVAs are suitable for people who are having difficulty repaying substantial amounts of debt. A repayment proposal is created by a licensed Insolvency Practitioner who will negotiate a lower repayment rate with creditors on behalf of the person applying for the IVA. If creditors holding 75% of the debt value agree to the lower repayment rate, they will also agree to freeze interest and charges and write off a proportion of the debt.

The IVA term normally lasts 5 years, which means the person taking out the IVA can expect to become free from the debts included in the arrangement usually at the end of 60 months.

There are some effects associated with entering into an IVA, such as credit ratings will be affected for 6 years following the arrangement and homeowners may be required to release equity from their property in the 4th year of the IVA. Failure to adhere to an IVA could result in bankruptcy.

An Individual Voluntary Arrangement is available to those with debts of £15,000 or more, however IVAs are subject to creditor agreement which is not always guaranteed.

Beware of companies who promise to clear all your debts

If a company advertises debt elimination and claims that it can write off debts, we recommend that you act with caution.

This is because there have been companies who have claimed that they could eliminate debts via a legal loophole. Sadly, over 15,000 individuals have been defrauded hundreds of pounds by these companies. Court judgements and statements from regulators have consigned such loopholes to history, but the promise of instant debt elimination creates a powerful motivation – especially during times of financial difficulties.

Fraudulent companies exploit this by obtaining a fee to ‘write off debts’, but do not provide any services. In many cases the companies are based overseas and prove impossible to trace after they have taken money.

Debt services you can trust

At Baines & Ernst, we do not offer a ‘debt elimination’ service; we provide tried and trusted debt management solutions that are aimed towards making repayments as affordable as possible.

Debt can be difficult to handle, but with the right advice and support, you could enjoy a future free from debt.

For confidential advice, call our freephone number: .