Is It Really Possible To Write Off Debt Or Is That A Myth?

In the United Kingdom, one of the primary worries on the minds’ of people is the escalating amount of personal debt, with the average household debt rising to approximately 9% which sits at an average of £9,400, people are looking for a debt solution which can write off debt whether it be over a period of time whilst it keeps the bailiffs away or wipes’ it away completely:

The Popularity Of The Idea Of Writing Off Personal Debt

Statistics for the searchers interest on Google.co.uk for the term “Write off debt” has remained steady now for more than five years as seen on the below image. 

It is thought that the reason for such a popularity of the idea of writing off personal debt is because for many the situation is hopeless, housing prices are too high, job security with zero hours contracts are at an all time high and tuition fees are often a high barrier to entry with many households, with competition for scholarships high and only becoming higher.

Is It Possible For British Citizens To Write Off Their Debt Or Is This A Myth?

Thanks to legislation written into law (in the insolvency act 1986) as a government debt solution scheme it actually is possible to write off debt if it meets the pre-conditions.

The preconditions for writing off personal debt are that the debt should be at least £5,000, and there should be at least two lenders, this debt solution is known as the individual voluntary arrangement (or the IVA).

The debt itself is not instantly written off with an IVA, it is spread out over a period of 60 months worth of payments.

When the IVA (individual voluntary arrangement) begins, the first step to writing off the debt is to get a payment plan in place, which is negotiated by the personal supervisor of the IVA, usually an insolvency practitioner who has experience in mediating between lenders (creditors) and people in debt, this generally takes the emotional decision making out of place and makes it easier to agree debt repayment terms which work for everyone.

After 5 years of this (government supported) debt repayment scheme known as the IVA, the remaining debt is written off.

Are There Other Ways To Write Off Personal Debts?

The only other way to reliably write off personal debt it would be bankruptcy, however this in itself carries many disadvantages, such as publicity and also the fact it is difficult to obtain credit post bankruptcy.

The short answer to the question: “is it really possible to write off any personal debt?” the short answer is yes, however with both debt solutions be it the IVA or bankruptcy there will inevitably be detrimental effects to an individuals’ credit rating.