“Your debts written off!”: Is it too good to be true?

posted by in Bad advice, Debt, IVA

If you need debt help now, use our online counselling service Debt Remedy or call us. We’re a debt charity and we can help.

Debt wipe out

Can you rub out your debts?

We’ve all heard or seen adverts suggesting that it’s possible to get your debts written off. It sounds too good to be true, for one reason. It usually is too good to be true.

In most cases it’s a way of enticing people in debt to take out a formal solution. There have been other less than satisfactory solutions offered by fee charging companies over the years that were less than effective, although many of these have now been outlawed thankfully.

In virtually every case it would be better to come to us for proper debt advice (you can get counselling via our online service Debt Remedy).

So what do they offer? For the most part “debts written off” means either an individual voluntary arrangement (IVA) or assisted bankruptcy.

Let’s look at these two in more detail.

An IVA is a form of insolvency that if you qualify for would see you in a legally binding arrangement with your creditors, overseen by an Insolvency Practitioner. IVAs usually last five to six years and in most cases creditors agree to write off a percentage of your debt.

An IVA is no easy ride and isn’t the best solution for everyone.

Assisted bankruptcy is where a company charges you a fee to help you go bankrupt. Although you can do this yourself if you want, most companies try to charge to help you fill in the official forms.

If bankruptcy is the best option for you StepChange Debt Charity has a specialist bankruptcy team that will guide you through the process for free.

Statute barred

However, there is piece of legislation called statute barred. This refers to the Limitations Act.

This is the only real piece of debt law that could see your debt deemed unenforceable, after a period of six years.

Creditors are unable to legally pursue you for the debt if, after six years;

  • The creditor has not already obtained a county court judgment (CCJ)
  • You or any one else owing the money (on a debt in joint names) have not made a payment
  • You have not written to the creditor admitting you owe the debt

So, I hear you cry, “All I have to do to get my debts written off is ignore the creditors and not pay them anything for six years!”.

Erm no, not really, that wouldn’t actually work.

As the above explanation suggests, if you start to ignore your creditors they’re liable to get in touch with you rather quickly and may even do this through the courts, by obtaining a CCJ or other debt collection procedure available to them.

“Okay, I’ll move house and not tell them!” some might shout.

That really won’t work either as it’s your responsibility to keep your creditors updated with your current address. Moving house and not telling your creditors where you’ve gone is seen as debt avoidance. This isn’t recommended.

The Limitations Act

The Act isn’t there to encourage debt avoidance or non payment and most judges will take a dim view of this tactic. It’s there to protect people from being forced to pay debts that have ‘timed out’ through no fault of their own.

The money owed itself is not written off; it’s still a debt and in reality it still exists, but with the Act in force the creditor can no longer enforce the debt.

The important thing to remember is that there are laws to protect you from being chased for very old debts that you weren’t aware of. However these laws cannot be twisted to help you get away without paying.

We find our clients are genuine in wanting to do their best to repay as much as they can afford to their creditors and at StepChange Debt Charity we want to do our best to give you the correct advice and guide you through the maze of legislation while being impartial and honest at all times.

We come across cases where a client is on a debt management plan with us and out of the blue a creditor they thought they had paid off years ago gets in contact to demand some money.

If this happens to you we can look into the case and give you the best advice for your circumstances. If the debt is genuinely statute barred we can give you all the advice and support you need.

Otherwise the promise to have “your debts written off” is simply too good to be true.

Matthew worked as an IVA drafter prior to working in social media. In a former life he wrote scripts for Eastenders, Emmerdale and Hollyoaks. He has 3 chickens, 2 dogs and a rabbit.

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Tags Bad advice Debt IVA
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  • moneyaware

    Hi,

    You should check with the letting agent – it may be that the rooms were rented to you separately and you have different tenancy agreements. That way you would not be affected by any action to collect your cousin’s rent. However what is more likely is that you signed a joint tenancy agreement – in that case the money outstanding would be for a total rental amount and you simply agreed between the two of you to pay 50/50. It is likely the landlord would chase you both for the debt and you would be jointly liable.

    Speak to the letting agency and ask about your options. They may agree to free you from the terms of the contract though I don’t assume this is something they would want to do.

    Shelter have a section on private renting that you may find useful http://england.shelter.org.uk/get_advice/private_renting

    Good luck with it.

    Thanks,
    Jess

  • one

    Hi , I m on i debt plan with Harrington brooks. This company paying every month for creditors. Some creditors, unhappy with that, refused offer, but debt company paying them Did they can ask police to arrest me on airport, when i traveling home??

    • moneyaware

      Hi and thanks for your message.

      The police won’t arrest you unless you commit a crime, not being able to pay your debts in full thankfully isn’t a crime.

      If a debt management plan is the best solution for your debt problems it’s worth noting that we provide them free of charge.

      I hope this helps.

      Kind regards,

      Mat

    • Karl Frankham

      In my experience I would avoid Harrington brooks. I was paying them £80 per month to go towards my creditors. I later found out that only £37 was going to my creditors and the rest to them for ‘admin’ fees. Total rip off. To be safe I would ask for a statement to see where all your money is going. Good luck.

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  • Kaine Manchester

    Hi,
    I had a mortgage 8 years ago to which got repossessed. I received a ccj with connections to a car finance company in which the car was written off but my insurance didn’t pay out this debt was transferred onto the mortgage yet this was an unsecured loan. Anyway cut a long story short my credit history has now been cleared and the defaults have come off my record after a 6 year period. Is it still possible for debt collectors to come after me for money owed. Do I contact them as I’ve recieved a letter requesting my whereabouts. And where do I stand I’ve been told to ask for original paperwork and contracts to which they will have difficulty providing and I’ve also been told that the debt will be written off. On my credit profile all debts and defaults show as settled. What does this mean?

    • moneyaware

      Hi there Kaine,

      if a debt becomes a CCJ then the Limitations Act (which is the 6-year period I think you may have been advised on, judging from what you’ve told us) will not apply. It can be enforced down the line by the county court and it will remain on your credit file indefinitely.

      If you dispute this CCJ for the reasons you gave us, it might be worth getting in touch with the court who handled the CCJ and ask them how to go about doing this. You may be able to fill in an N9B dispute form but it’s worth checking with the court before you do so in case it’s too late to use that form: http://www.moneyclaimsuk.co.uk/PDFForms/N9B.pdf

      If it turns out that you’re liable for this CCJ and need to start paying back, please get in touch with us because we’ll be able to advise you on how to deal with it and any other debts you have,

      If there are other debts there that have surpassed the 6 year timeframe for a creditor to establish payment but have NOT yet gone to county court, simply follow our step-by-step guide here: http://moneyaware.co.uk/2013/10/statute-barred-debt/

      Best wishes

      Rachel

      • Kaine Manchester

        Thank you so much for this information

  • Ian Adamson

    Hope you can help,
    I have an unsecured bank loan with £6000 outstanding although the original loan was for around £2200 so I’m presuming it’s interest and charges etc. I’m not sure of the exact date the loan was taken out but it was around 2007-2008. I had increase in my epilepsy condition not long after taking out the loan and was unable to work and haven’t since nor made any payments or contacted the bank (stupid I know). I only made around 3 re-payments after taking out the loan at the beginning. I have heard nothing for years until about 4 months ago from a debt company, which I ignored. Three days ago I received a county court letter. Do I admit this full amount, and offer to make a payment although this would be low as I’m unemployed or take another route, any advice would be appreciated. Thanks.

  • Ian Adamson

    Hi, hope you can advise,
    I took out an unsecured bank loan out sometime around 2007-2008 for approx £2300. After paying about 3 payments back my epilepsy condition became worse and I was unable to work and haven’t since. Been stupid I have never contacted the bank or any debt letters that came shortly after. Six to seven years on I started to receive debt letters again from a debt company demanding just over £6000 to clear the debt, this was about 5 months ago and they sent about three. Last week I received a county court letter asking do I agree with the debt or contest. Not sure what to do here, Do I admit to this new amount and send an offer to the debt company which would be low being unemployed, but then risk them turning it down and would the court then send the bailiffs or would they see I’m unemployed and deem the offer acceptable or should I contest this amount or because the loan is so old am I able to ask it to be written off? Clock is ticking on filling this form out and no idea what to do.
    Any help would be appreciated. Thanks.

    • moneyaware

      Hi Ian,

      The debt may be Statute Barred. That means the statute
      of limitations has passed and the debt is no longer legally enforceable. You still owe the money, and can chose to pay it back but the creditor cannot legally enforce it. Here is an article clearing explaining how to deal with a statute barred debt http://moneyaware.co.uk/2013/10/statute-barred-debt/

      If you were to make a payment now, the statute of limitations would begin again (and last for a further 6 years).

      Read the article and send the template letter to the creditor. Respond to the CCJ lodging a defence that the debt is statute barred.

      If the debt is not statute barred and the creditor sends you proof of that, you should make an offer based on an amount you can afford. The county court will rule what that is after they’ve seen your budget.

      Hope this helps.

      Thanks,

      Jess

      • Ian Adamson

        Many thanks for your quick response. I will take your advice, see what happens and post the outcome, again many thanks.

  • Pam Rogers

    Hi
    I am present on a DMP – which started four years ago – my current debts amount to £18,500. One of my relatives has offered to help pay off my debts with a sum of £5,000 – would this go any way to paying off all my debts? I am a pensioner and currently paying £130.00 a month – I will be 81 when the debt is paid if I continue monthly payments!

    • moneyaware

      Hi Pam,

      Thanks for posting. It would depend on how willing your creditors were to accept a reduced settlement really. Sometimes they can be willing to take vastly reduced sums and other times they can be insistent on receiving the full amount owed.

      Using £5,000 to clear a debt of £18,500 would need your creditors to accept about 27p for every £1 you owe. This is fairly in the context of full and final settlements but it’s worth investigating.

      If you give your DMP provider a call they should be able to give you advice.

      Kind regards

      James

  • moneyaware

    Hi Naomi,

    I’m sorry to hear that you’re having a hard time at the moment. Debt can be incredibly stressful, particularly when there are other issues to deal with at the same time, like a health problem.

    Here’s my thoughts on the situation:

    Santander debt – this debt is in your name but someone else spent the money. You could try to get this other person to pay back this debt but legally they’ve got no responsibility to repay the debt if it’s just in your name.

    Barclays debt – If there’s fraud on your account then I’d hope this should mean that your account is returned to how it was before you were a victim of the fraud.

    Vodafone debt – I’d recommend you ask for a detailed statement from them to prove that you owe them this amount. It seems strange that there’s such a large charge when you were out of contract. They should be able to clarify this for you.

    It sounds like these debts are causing you a lot of worry. I’d recommend that you give our helpline a call: http://www.stepchange.org/Contactus.aspx. We’ll be able to give you advice about how to deal with these debts.

    Kind regards

    James

  • Seyi

    Hi,

    I have just paid off a debt that was listed as default on my credit score in June 2007 today, my issue is not the amount I paid to settle but I hope paying this off will not reactivate the debt for potential lenders to see even though its now settled. The collection company confirmed that the debt must have been dropped and they affirmed that they are no longer legally allowed to take it to court. Please am I right in my thinking that by the time the collection company gets to my credit score to update it as settled, they wouldn’t be able to find the debt anymore and they will take no further action and I can continue to enjoy my credit score as it is at present. I hope this is how it will play out?

    • moneyaware

      Hi there Seyi,

      Defaults stay on your credit file for six years from the date they were entered, so I wouldn’t expect your default from June 2007 to be showing anymore. It should have dropped off last summer.

      If you’re not sure what information you have on your credit history about this debt then you can check for free using Noddle which uses the Call Credit reference agency: https://www.noddle.co.uk/.

      I hope this clears things up.

      Kind regards

      James

      • Seyi

        Thanks so much, you made my day

  • Malissa Delh

    Hello, I am Malissa Delh, currently living in New jersey city, USA. I am a widow at the moment with three kids and i was stuck in a financial situation in April 2014 and i needed to refinance and pay my bills. I tried seeking loans from various loan firms both private and corporate but never with success, and most banks declined my credit. But as God would have it, I was introduced to a Man of God a private loan lender who gave me a loan of $85,000USD and today am a business owner and my kids are doing well at the moment, if you must contact any firm with reference to securing a loan without collateral , no credit check, no co signer with just 2% interest rate and better repayment plans and schedule, please contact Mr James Lewis. He doesn’t know that am doing this but am so happy now and i decided to let people know more about him and also i want God to bless him more.You can contact him through his email: lewisloancompany@yahoo.com

  • fiona

    Can anyone advise me please-I have been ona DMP with Stepchange or 3yrs now and have recently had a letter from tax credits informing me that i owe them £2,444 pounds as thye say i wasnt entitled to them -I inrmed them that my son was doing a foundation level course at college and thye continued to pay me -I don’t know which way to turn as I don’t have any spare income to pay this money back – what can i do? It is making me ill and I feel so depressed its affecting my daily life in that I don’t want to go to work . and dont enjoy ilife anymore

    • moneyaware

      Hi there Fiona, thank you for posting.

      Could you please get in touch with us on the number provided when you signed up for a DMP with us? We will need to advise you on how best to deal with this.

      Kind regards

      Rachel

  • LJ

    Hi Moneyaware, hope you can help with something. Not sure if my debt is written off, so hoping for some good advice! Apologies for the long-winded detail, but here we go:-
    My ex-girlfriend took out a £10,000 loan from Tesco for me, when we were together around 5 years ago. I was unable to take out more loans, as I was mortgaged to the hilt, already paying off some credit cards, etc. The loan was to pay a final payment on my car, pay off a bit of this debt, and generally lump everything into a single payment, spread over 5 years. I managed to get a 2nd job, so was able to pay for the loan’s first few payments. However the strain of not seeing each other caused my ex- to leave.
    As I was now singly paying for all the bills, I struggled to pay for the next few months, so my ex- paid with some of her earnings. I was able to get more hours on my 2nd job, so could eventually pay my ex- the monthly payment for the loan, and she would pay the loan payment for that month from her account. Weirdly, my life was getting better, whilst my ex- was going a bit downhill. It came to pass, that with her next partner, my ex- was unable to pay one or two payments, so the loan left Tesco, and went to a Debt Collection agency, called Westcot, based in Hull.
    As the loan was for me, although in my ex-es name, I wanted to get this sorted, and not have the loan hanging over us, as we were no longer a couple, and attempting to lead individual lives.
    I was able to get in touch with Westcot, and re-configure the repayments by Direct Debit, from my bank account instead of hers, taking the loan back upto 5 years, but paying £150 a month, instead of £250. Trying to do the decent thing here! Westcot at the time also mentioned about taking a settlement figure, to rid the debt completely. At the time I wasn’t able to do this, but again, things improved, so I made contact again, to hear their offer. At this point, there was still around £7,000 left to pay, and I was paying £150 a month. Wescot said if “I pay £3,500 then that will be fine, the debt is settled” (although the details would still remain on my ex-girlfriend’s credit record for some time.)
    I decided to pay the £3,500 on a 0% credit card I’d accrued back in December 2013, and heard nothing more from Westcot, everyone was happy, I could pay the £3,500 off the credit card in my own good time, my ex-girlfriend and I had no more links, and we were able to move on…
    …Until yesterday, when my ex-girlfriend receives a letter from another debt-collection agency (can’t remember the name she said) asking her for over £3,000 from a Tesco loan, and contacts me….
    How can this be? Has someone else gotten/bought her details, details of the loan, and is trying it on? Has Westcot sold the debt to another company? Surely if I’ve settled the loan with Westcot, the debt can’t be “re-invented” and re-chased from the original loanee?
    Obviously, I cannot afford to pay “more again”, but very annoyed that they’ve gone after my ex, and brought it all up again. I just want this dead and buried. Am I right? Can I threaten them back? Or should I/we be worried?

    • moneyaware

      Hi there and thanks for your question.

      It sounds as though you tried to do the right thing but unfortunately if you didn’t receive written confirmation that the settlement would write the remainder of the debt off, they can continue to chase your ex-girlfriend for the debt.

      You could contact the collection agency and explain your
      situation to see if they will accept a settlement figure but there’s no guarantee that they will agree to this.

      As she is liable for the debt she will need to contact them with an arrangement to repay the debt at a rate that you can afford. If
      you or your ex-girlfriend would like more detailed advice you can get in touch with us.

      I hope this helps,
      Pavan

  • claire

    Hello,

    My now (ex ) husband took out a secured loan on our house in 2008 both are name s on the loan, we are now divorced since 2010 the divorce decree states he is sole responsible for the £15000 loan and I am for the mortgage he has not paid a penny and the loan is now sitting at £29000 they send me letters every week with admin charges of £40 we were taken to court in 2010 and he said he would pay but has not! he has moved on with his life remarried 3 kids ect I am left with letters and lots of debt!! I do not want to go bankrupt as I want to try and keep my home I have been here 11 years now and feel why should I!
    Any help/advise would be great.

    Thanks

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  • http://www.citizensadvice.org.uk/index/pressoffice/press_index/press_20140110.htm marc

    Hello,
    I need some help… I took aout a payday loan with speed credit and I have been paying back £40 a month always on time…Then Speed credit went into administration and it was taken over by NDR Northern Debt Recovery who also went in to adminstation in 2013 due to unlawfal practices. here is the link from the citezen advice webiste about them: http://www.citizensadvice.org.uk/index/pressoffice/press_index/press_20140110.htm

    I contacted them to settle my balance in full of £330 but the adviser said to me not to make any payments due to the fact that they are not allwed to take any money from me and if i did make a payment there is noway of knowing whether the payment will get allocated to my account…

    Now it is seven months later and i got an email ffrom a company called http://www.digitalfinancialservices.co.uk saying that I owe them the money and I need to make payment.. what should i do as the email came straight through to my junk mail and I have not even got a written letter to confirm that they would be taking ove the debt

    What should I do

    • moneyaware

      Hi there and thanks for your question.

      You’re right to be suspicious if you’ve not received anything through the post. I’d recommend that you contact them asking for proof of the debt and also check your credit reference file to see if the debt has been updated to say who owns it on there.

      I hope this helps.

      • http://www.citizensadvice.org.uk/index/pressoffice/press_index/press_20140110.htm marc

        Thank you – I will check my credit file ASAP!!

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  • Bradley Phillips

    Hi there I was a director of a company which was dissolvedand we had 4 directors one has recently had a ccj against him. If I also claim liability can I have a ccj against me or does a new case have to be open. As this is causong me anxiety. Also im unemployed and have no assets so if I had a ccj claimed against me could it be written off as I have no money. Thanks

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