Many TV, radio and newspaper adverts promise to be able to write off debt via a range of debt solutions and many of the options you could enter to resolve debt problems will allow you to clear a percentage of your debt, but are there negatives?
It’s important to know the pros and cons of entering debt solutions which allow you to write off debt you can’t afford. The solutions are perfect for some people, but not everybody. So, would a debt write off solution be suitable for you.
If you want immediate help to understand if you can clear the debt you can’t afford to repay, then speak to Debt Support Trust on 0800 085 0226 or complete our debt analyser test.
Debt Write Off Solution
There are a number of debt write solutions you could enter and these all come with one main issues – your credit file. The credit file is used to determine whether you can get credit from companies and what rate of interest you will pay. Entering any debt solution will typically mean your credit file receives a default. This default lasts for 6 years from the date it’s added.
The debt solutions which allow you to write off a percentage of your debt include:
IVA: A debt solution for people living in England, Wales and Northern Ireland. The solution lasts 5 years typically and you pay what you can afford each month. If you have any equity in assets this could be asked to be released. You will be able to keep your house in an IVA.
Trust Deed Scotland: The Scottish version of the IVA lasts 4 years, usually, and you pay what you can afford to the debt each month. If the debt isn’t repaid in full then any outstanding debt will be written off at the end.
Bankruptcy: In bankruptcy you will have the debt you can’t afford written off. If you have any assets with equity or disposable income this will be required for the bankruptcy.
Write Off Debts
When considering whether you should enter a solution which allows you to write off a proportion of your debt, consider the following:
- PPI: In any debt solution (IVA, Trust Deed or Bankruptcy) any PPI would have to be reclaimed if it were missold. Your practitioner would take charge of this.
- Credit file: Your credit file will be impaired for 6 years. This means it will be harder for you to get credit once your debt solution is finished.
- Assets: If you live in Scotland and have a house then this could be sold if there’s equity in the property. If you live in England, Wales or Northern Ireland you could be asked to remortgage to repay the outstanding debt. If you can’t remortgage, and you have equity, then your IVA would last 6 years in total. In bankruptcy, any asset which has equity will have to be sold or a third party will have to make the payment of equity on your behalf.
You can get debt advice about all debt solutions by telephoning 0800 085 0226 or by completing a debt analyser below.