It is not always easy to convince creditors to write off a debt you owe them. You will normally need to convince a creditor that writing off the debt is in their best interest as well as in yours. It is helpful to evidence why they are not likely to get enough money back in the long term, and why it is not cost effective for them to continue to pursue you.
Debt Write-off scenarios
A creditor will need proof that you are unable to repay the debt you owe . It will help your case if you haven't been able to make payments and can evidence on your income and expenditure form that there is no surplus left to offer your creditors.
Creditor refuses the write-off
If the creditor refuses to write off your debt, ask for an explanation as to why they have refused, if they have not already given you reasons. If the creditor is a registered firm with the Lending Standards Board, they are encouraged to give reasons in Section 11 of the Information for Practitioners - Financial difficulty.
In some circumstances creditors can sometimes agree or offer to reduce payments over a limited period, with the rest of the balance written off. You should ask them to suspend interest and charges during the repayment period.
Effects of a Write-off
Obtaining a write-off on your debt is likely to have a negative impact on your ability to get credit in the future for up to six years. If a creditor writes off your debt, it means that no further payments are due. You should ask that the balance on credit reference agency reports is set to zero, although the debt will be registered as a default on credit reference agency reports, they can add a flag to the account to indicate that a write-off or a partial write-off was agreed. You should obtain copies from all three credit reference agencies to check that this has been done.
If your debts are owed jointly with another person, the creditor might agree to write off your liability for the debt but still pursue the other person for the whole amount. To avoid this, you should request a write-off agreement that includes both parties in the agreement.
Tax Credit overpayments
HM Revenue and Customs (HMRC) rarely agree to write off a tax credit overpayment debt. However, in particular circumstances they may agree to release the person from their liability, this is known as remission. They may consider remission when the person owing the debt has mental health issues or is suffering from severe hardship, or when they are satisfied that the person should not continue to be pursued for payment of the debt.