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

posted by in Bad advice, Debt, IVA

This page contains information about debt solutions available in England, Wales and Northern Ireland. Debt advice in Scotland involves similar but different solutions. Before considering an IVA as a debt solution, please make sure you fully understand the risks involved when entering an IVA.

If you need debt help now, use our online debt advice tool 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 some 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 many cases it would be better to talk to to a free, impartial organisation for debt advice (you can get debt advice by using our online Debt Remedy tool)

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, some companies try to charge to help you fill in the official forms.

This article doesn’t cover all of the benefits and considerations of an IVA. For more information about IVAs and bankruptcy visit the StepChange website for free, impartial advice.

Statute barred

However, there is a piece of legislation called the Limitation Act which refers to something called ‘statute barred’.

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 most unsecured debts 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 likely 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

Importantly, the act isn’t there to encourage debt avoidance or non-payment and some 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.

While the act does apply to most unsecured debts the debt doesn’t disappear and it’s not ‘written off’ but with the act in force the creditor can no longer enforce the debt through the courts.

Finally, the Limitation Act doesn’t apply to all types of debt and some debts such as benefits overpayments and Council Tax don’t need to take court action to enforce debts.

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 sometimes come across cases where a client is on a debt management plan (DMP) with us and out of the blue a creditor they thought they had paid off years ago gets in contact to ask for 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
  • Genevieve

    Hello,

    I wonder if you can clarify something for me please.
    My husband and i closed our business in 2009 as we were losing money (the business was a pub and had lost trade following the smoking ban) plus I was seriously ill recovering from ovarian cancer.
    We owe £3226.92 for non domestic rates for the period of 1.4.2008 – 8.1.2009, along with various other amounts for council tax for the pub’s upstairs flat and our own home – we have paid 65% of the outstanding council tax but still owe the non domestic rates, we are slowly clearing outstanding mortgage arrears and other debts which is continuing to cause us financial hardship, but we are determind to clear our debts.
    I have though read about the Limitations Act and wonder whether I could apply to the council for the non domestic rates to be written off on the basis of the six year rule, our financial hardship , the fact we had to close our and our paying 65% of what was owed.
    Any help would be great.

    • moneyaware

      Hi Genevieve,

      Thanks for your message and I’m sorry to hear about your
      situation.

      As we advise on consumer credit and your debts are related to a
      business, we aren’t best placed to answer your questions. I’d suggest you give Business Debtline a call, as they may be able to provide you with more suitable advice. You can find out how to contact Business Debtline here: https://www.businessdebtline.org/

      I hope this helps.

      Kind regards,

      Laura

  • rimz

    hi I took a loan last april for 3500 I have been paying 280 a month it is a two year loan but know I can not afford it, if they was to take my payment off the whole loan I could pay in one go from student loan but is very hard any advice,

    • moneyaware

      HI Rimz,

      Thanks for your message.

      I’m sorry if I’ve misunderstood you, but it sounds like you’re asking if you can ask the loan company to reduce the amount you owe to just the amount you borrowed minus the payments you’ve already made.

      You can ask them if they’d be willing to reduce the amount you owe but the company can say no to this kind of request.

      I’m not confident I’ve understood your question, so please let me know if you meant something else.

      Kind regards

      James

  • Gurrier

    Hello,

    I believe that I may have been issued 2 SP30’s around 2-3 years ago. Having moved house, I am unsure and unaware of any contact that may have been attempted. Upon checking the DVLA website I see that I have no penalty points displayed and no disqualifications; is it reasonable to assume that I am free from these mental shackles?

    I also believe that I may have received approximately three fines from Transport for London for unpaid tube fare. These extend back 3-4 years. Having not heard anything… (quite possible they have tried to make contact to an incorrect address) is there anyway of finding out if TFL are chasing me/if they have given up the proverbial ‘chase’?

    Any help would be sincerely appreciated.

    Kind regards
    Gurrier

    • moneyaware

      Hi Gurrier,

      I think the only way to be sure of whether you have fines outstanding would be to contact the DVLA and TFL to ask them if they’re chasing you.

      If you did incur penalties and they haven’t had up to date details then it may be that they’re trying to contact you but can’t.

      They way you mention “mental shackles” makes me think that these issues are causing you some worry, so it’s likely to be better to contact them and see what the situation is.

      If it turns out that you do have some fines to repay (and points to add to your licence) then you can call us for debt advice. Here’s the details: http://www.stepchange.org/Contactus.aspx.

      Kind regards

      James

  • Gem

    Years ago ( aproximatley 8 ) l lost my business, my home, my wife, everything, I ended up on anti depressants, homeless and contemplated many many times taking my own life.
    I lived in a van for a good while,( still do at points ) turned to drugs and gambling and basically disappeared.
    I managed to sort of patch things up with my wife BUT not properly, stopped the drugs and the gambling.
    My wife wont allow me any kind of association with her address etc and who can blame her.
    My question and point is l am and have been living ” under the radar ” for the last 8 years, l have to because l fear going back to where l was. I cant, it nearly killed me last time.
    Will l go to jail at some point for my debts ? They are loans, credit cards, overdrafts etc all in my own name, not my wifes, nothing joint. I had the debts before she met me.
    I am literally terrified of resurfacing into the real world as pathetic as that sounds. My life is reaching a normal point now and l really couldnt go back to the threatening phone calls letters etc.
    Should l just stay as l am ? Lay low etc ?
    Genuinely sick of the whole situation, a situation l never brought on myself, l was ripped off royally.
    Sorry for the long post, please delete if its inappropriate.

    • moneyaware

      Hi there,

      Thanks for your message.

      I’m sorry to hear about this situation. It sounds like you’ve been through a lot.

      I think you’d benefit from getting in touch with our Helpline so you can talk with one of our advisors about your situation.
      We wouldn’t usually recommend ignoring your debts as this could lead to your creditors taking additional action to retrieve them although it’s unlikely that you’d go to jail for a debt.

      As a debt advice charity, we’re here to help and can offer you free, impartial advice about the best way to deal with your debt.
      When you call our Helpline, our advisors will talk through your budget, income and debts. They’ll use the information you give them to let
      you know what debt solutions are available to you. If you decide to move forward with our recommended debt solution, we’ll be here to help you at every step of the way.

      You can find out how to get in touch with us here:

      http://www.stepchange.org/Contactus.aspx

      I hope this helps,

      Jen

  • Andrew Mulqueen

    Hi. i wonder if you could help me,
    In 2009 i entered into an IVA with 90,000+ debt. The whole reason for this was so i could try to pay off my debts and keep my house that i was living in. I was left with virtually nothing to live on. Due to the mortgage rate rises, loss of job and cost of living increases. I could not afford to pay the agreed amount to the IP and after 11 months after the start the IVA, I defaulted and it was Canceled. My house was repossessed and i was made homeless in Dec 2011.
    I managed to get into rented accommodation and let my creditors know where i my new contact address was.
    I Have been living in this address for the last 4 years. I have been using the same bank account since the IVA and have managed to live life as normal for the last few years.
    Now i have found the love of my life and want to move in with her, Unfortunately i still have £56,000 worth of debt on my credit file and do not want to drag her credit rating down with me, so want to move forward with this.
    I was wondering if Bankruptcy is the best option. even though i have looked on line and most of the debts become statute barred at the end of this year?

    • moneyaware

      Hi there Andrew, thanks for posting.

      I’m very sorry to hear of the difficulties you’ve been dealing
      with. I’m glad to hear that things are much better now you’re in a new and happy relationship.

      With regards to the debt you’re dealing with, the Limitation Act
      (under which a debt becomes statute barred) only comes into effect if the debts haven’t had any kind of payment or acknowledgment from you for six years or escalated the debt to County Court. Any debts that have gone to County Court
      will not fall under the Limitation Act.

      If you believe your debts would fall under the Limitation Act,
      you can send a letter to the creditor to make them aware. We have a blogpost that can help with this: http://moneyaware.co.uk/2013/10/statute-barred-debt/

      Please be aware that even if a debt is declared statute barred,
      it doesn’t mean that the debt is ‘written off’. The Limitation Act only
      prevents the creditor from pursuing further enforcement through county court but the debt technically still exists.

      Moving in with your partner isn’t likely to affect her credit
      rating, so long as your finances are kept separate. It’s usually only if you both apply for a joint credit product such as a mortgage, bank account or unsecured loan that this may be the case.

      If you’re considering bankruptcy as an option, it may be a good
      idea to get in touch with us for some free and confidential debt advice. We’ll take a look at your budget and explore any debt solutions we feel may be right
      for you, based on your circumstances.

      You can call our Helpline free of charge on 0800 138 1111. We’re
      open Mon – Fri 8am to 8pm and Sat 8am to 4pm. Alternatively, our online advice tool Debt Remedy can help you put together a personal action plan in around 20
      minutes – http://www.stepchange.org/Debtremedy.aspx

      I hope this helps,

      Kind regards

      Rachel

  • Diana

    I am wondering if an iva or bankruptcy is best for me. I’ve been paying on r debt management plan for 5 years. The last 2 years I’ve only been able to pay £60 a month because I was made redundant but am struggling with this. Ive debt i £23000. I could take some money, £16000 from my pension as advised by my financial pension chap. I’d obviously have to pay tax on top of that but would this be enough for a lump sum iva?

    • moneyaware

      Hi Diana,

      Thanks for your message. IVAs and bankruptcy are both forms of
      insolvency, and so entering into one of these solutions isn’t a decision that should be taken lightly. It’s important to get impartial advice to make sure it’s the best option for your situation.

      We do offer bankruptcy and IVAs, along with a range of other
      debt solutions that you can read about here: http://www.stepchange.org/Howwecanhelpyou.aspx
      However to know which solutions are most suitable for you, we’d need to have a chat with you in more detail about your financial circumstances. If we recommend bankruptcy or an IVA for your situation then we’ll be able to talk you through the process.

      You can either give our Helpline a call to have a chat with a
      debt advisor, or you could use our Debt Remedy tool which would guide you through the same advice process online. Details of how to get in touch with us are here: http://www.stepchange.org/Contactus.aspx

      I hope this helps.

      Kind regards,

      Laura

  • Samantha

    Hi, i was wondering if you can give me some advice?
    I checked my credit file and I have an open credit account in which I defaulted on since 04/02/2010. I only checked my file a week ago and was planning on paying off the debt next week in full as that’s when I get paid. I’m now having second thoughts about paying the debt.
    Basically i’ve read that if i’m to settle the debt, on my credit file against the debt I have, it will read ‘settled/satisfied’ and that will then stay on my file for 6 years from the date my debt was ‘settled/satisfied’. As it stands i’m one month away from the default being removed from my credit file, so i’m in a dilemma about what to do.

    Can you advise me please.

    Regards

    • moneyaware

      Hi Samantha,

      If the debt you have is still outstanding, there’s the risk that the creditor will take further action against you if the debt is left unpaid. The default (and any listings on your credit file) will only show for a maximum of 6 years, but if the debt is outstanding and defaulted and you decide to leave it, there’s nothing to prevent a creditor from taking further action such as a county court judgment (CCJ) at a later time. Just because a debt doesn’t show on your credit file, it doesn’t mean that it doesn’t exist and the risk of further action has the potential to negatively affect your credit file further.

      It’s hard for us to offer any specific advice on this. What you decide to do depends on whether you’re looking to deal with the debt and repay it, which may affect you in the short term, or risk leaving the debt and have the possibility of further action being taken against you.

      Credit ratings and credit files aren’t permanent, and nothing on your file will show forever. How lenders perceive your credit file is different in each case, and a settled/satisfied debt may look more favourable than a defaulted debt, or a CCJ (if a creditor decides to take action).

      I hope this helps,

      Rory

  • Samantha

    Hi, i was wondering if you can give me some advice?
    I checked my credit file and I have an open credit account in which I defaulted on since 04/02/2010. I only checked my file a week ago and was planning on paying off the debt next week in full as that’s when I get paid. I’m now having second thoughts about paying the debt.
    Basically i’ve read that if i’m to settle the debt, on my credit file against the debt I have, it will read ‘settled/satisfied’ and that will then stay on my file for 6 years from the date my debt was ‘settled/satisfied’. As it stands i’m one month away from the default being removed from my credit file, so i’m in a dilemma about what to do.

    Can you advise me please.

  • Sharon Coolidge

    I live in USA, i want to use this medium to alert all loan seekers to be very careful because there are scammers everywhere.Few months ago I was financially strained, and due to my desperation I was scammed by several online lenders. I had almost lost hope until a friend of mine referred me to a very reliable lender called Mr. Alfred Kessinger who lend me a loan of $20,000 under 24hours without any stress. If you are in need of any kind of loan just contact him now via: Am.invest@hotmail.com, I‘m using this medium to alert all loan seekers because of the hell I passed through in the hands of those fraudulent lenders. And I don’t wish even my enemy to pass through such hell that I passed through in the hands of those fraudulent online lenders,i will also want you to help me pass this information to others who are also in need of a loan once you have also receive your loan from Mr. Alfred Kessinger, i pray that God should give him long life.

  • koketsoMonique Andrews

    good day
    im under debt review I have never paid the debt counsellors I made arrangements on my own with my credit providers and some of my debt has been written off.
    id like to know can the debt experts take my name of under the debt review listers.
    please help

    • moneyaware

      Hi there,

      Thanks for your message. I’m sorry, I don’t fully understand your question so it might be best to give our Helpline a call and discuss it with an advisor over the phone. You can find out how to contact us here: https://www.stepchange.org/Contactus.aspx

      I hope this helps.

      Kind regards,

      Laura

  • I have a DMP with Compass Debt Counsellors paying £300 per month of which £150 should be going to my creditors. I’ve been paying this for 2 years without default. Only about £85 pcm is being paid to them and the balance is being deducted from the Compass fee of £9000 (10% of the original debt which was over estimated – it was closer to £70,000.
    I have a few questions:
    1. Is it possible to change Debt Management Company and go to a free service?
    2. If I do this, would I incur charges from Compass?
    3. Would a free Stepchange DMP apply the same payments to my creditors?
    4. I have recently been approached by Abbey Solicitors, Manchester who are asking to take over my plan for the same £300 pcm with the aim of writing off my debts if incorrectly applied (?). I’m worried that this may exacerbate my situation. Can you advise?

    • moneyaware

      Hi Keith,

      Thanks for your message. As a DMP is an informal agreement with your creditor, it’s possible to switch from a fee-charging provider to a free provider. However I can’t say whether your current debt management company would charge you for this, as it’ll depend on the agreement you have with them. I’d suggest you speak to your current debt management company about this for guidance.

      Before going into detail about the payments we’d make to your creditors, we’d need to go through our advice process with you to check that a DMP is what we’d recommend for your situation. If it is, then this is something we’d be able to offer you for free. We’d also be able to discuss how we’d work out your payments and talk you through the process of switching your DMP, as well as any questions you might have about the solicitor that’s been in touch with you.

      I’d suggest you give us a call to speak to an advisor about how we can best support you. You can find out how to get in touch with us here: https://www.stepchange.org/Contactus.aspx

      I hope this helps, but if you have any further questions please just let me know.

      Kind regards,

      Laura

  • NIc

    HI, im wondering if anyone on here has had any success in asking the bank to write of an over draft balance?
    If so can some one please advise me of a letter template I can use?
    Nic

    • moneyaware

      Hi there Nic, thanks for posting.

      There wouldn’t be a template letter to ‘write off’ the debt as such. If this debt is older than six years and hasn’t had any kind of payment or acknowledgment from you for 6 years or longer, then it may be classed as ‘statute barred’. This would mean that the timeframe for the creditor to enforce the debt through County Court has passed.

      It doesn’t write off the debt, and it may still be visible on your credit file. It’s also worth noting that a debt cannot be made statute barred if it’s already been escalated to County Court and a County Court judgment has been granted.

      You can find out more about statute barred debt here: http://moneyaware.co.uk/2013/10/statute-barred-debt/

      Kind regards

      Rachel

  • Harry

    Hi
    We have been with Compass Debt Counsellors too for three years and now they are no longer functioning have been approached by Abbey Solitors to apparently nul and void our debts. I am confused what has happened to Compass and our money and also are Abbey for real??
    Harry

    • moneyaware

      Hi there,

      Although we can’t comment individually on whether the company dealing with your debts is operating, we are aware of a number of debt management firms that have closed recently.

      We also can’t verify whether the new company are legitimate, but we’d always recommend seeking free, expert debt advice from a trusted source.

      We have a page on what to do if your debt management company has closed: http://www.stepchange.org/Howwecanhelpyou/DebtManagementCompanyClosed.aspx

      I hope this helps,

      Rory

  • Vic

    Hi there, I have dept of about 7000. I am paying them off monthly to a dept company. I feel I’m going to be paying it off for years I just want it sorted now. I have heard of someone I know who has had her dept written off. Do you know of why that would be and how? Also would my dept stop me getting a mortgage in future with my partner and would it ruin his credit history when we move in or get married? Thanks

    • moneyaware

      Hi Vic,

      Thanks for posting.

      If the person you knew had an insolvency debt solution, such as bankruptcy or an individual voluntary arrangement, their debts could have been written off at the end of it. However insolvency debt solutions aren’t suited to everyone and it’s important to get expert advice first to make sure they’re suited to your circumstances.

      You may have also noticed adverts on social media platforms offering ways to write off your debt. The solutions offered in the adverts are again insolvency solutions however these solutions are usually not an easy way out and should never be simply offered without first understanding your situation. You also need to understand the risks as well as the benefits of these solutions if they’re ever recommended for you. You can read more about these adverts here:

      http://moneyaware.co.uk/2015/06/facebook-debt-ads/

      If you’d like to get in touch with us for some free debt advice, we can let you know of any debt solutions suited to your situation and how to proceed with them.

      You can find out how to get in touch with us here:

      http://www.stepchange.org/Contactus.aspx

      If you’re making reduced payments towards a debt, it may have an impact on your credit file and this may mean you find it difficult to take out credit in the future. However we’d always encourage you to work on paying off your debts first and then work on improving your credit file later.

      If you and your partner don’t have any joint credit agreements, such as a loan with both of your names on the contract, your credit file shouldn’t impact his even if you are living together.

      I hope this has helped,

      Jen

  • Faith Mabaso

    hi
    i have an account at exact and they written off it so wat does that mean

    • moneyaware

      Hi Faith,

      Thanks for posting.

      If an account is written off it usually means you no longer owe the money.

      However if you’re unsure you can always get in touch with the creditor to find out what’s happened.

      I hope this helps,

      Jen

  • Sarah

    Hi,

    I have applied to my council to be transferred to a larger property as I now have two children and we are all crammed into a one bedroom flat. I was given this flat by them just over three years ago in Feb 2013. This February, I received a letter from them telling me that I can’t be put on the transfer register because I have a housing related debt with them. They refer to £625 rent arrears accrued when I lived in temporary accommodation with them about ten years ago. I have no recollection of this debt and they have never sent me any communication about it and I don’t understand why they gave me this flat in the first place if I owed them rent. They are saying that they will not move me until this debt is paid in full. Can they really do this after ten years? I am really struggling financially as it is and I’m suffering terribly from anxiety and depression. Does The Limitations Act cover this or does it only apply to them taking court action against me? I’d be really grateful for your advice.
    Thank you,
    Sarah

    • moneyaware

      Hi Sarah,

      Thanks for your message and I’m sorry to hear about your situation.

      The Limitations Act would not apply in this situation as this isn’t a consumer credit debt, but it’s important to remember there are plenty of organisations that can offer you help and support with this.

      First of all, I’d recommend you give Shelter a call on 0808 800 4444 and discuss your housing situation with them. They work alongside councils and may be able to help you to negotiate another property.

      I’m surprised to hear that your council is using the fact that you have a housing related debt with them as a reason to not offer you support. If you’d like to dispute this then this isn’t something we’d be able to help with, but I’d recommend you speak to your local Citizens Advice Bureau who should be able to provide further support. If you’re not sure where your nearest one is, you can check on their website: https://www.citizensadvice.org.uk/

      Finally, I’d recommend you get in touch with us and speak to one of our advisors about the rent arrears. If you give us a call, we’ll be able to have a chat with you about your situation, offer you advice and recommend how we can best support you to deal with your debt. You can find out how to get in touch with us here: http://www.stepchange.org/Contactus.aspx

      I hope this helps, but if you have any other questions please just let me know.

      Kind regards,

      Laura