Debt Write Offs

Debt Write Offs are when you, or a money adviser, write to a creditor and request they write a debt off, in full, or in part.

It may surprise you, but Lenders are prepared to consider debt Write Offs, in certain circumstances.

When considering Write Offs, however, it is useful to think of there being two different types.

Full and Final Settlements

The first type is when you want to make a partial payment to a debt in full and final settlement.  The other type is when you request the Creditor writes the debt off in full.

Ask the Lender for a Full and Final Settlement Figure

The first way is to ask the Creditor what they would settle for and, therefore, invite them to give you a settlement figure.

A Firm does not have to give you a settlement figure, but some firms may be prepared to give you a discount if you are proposing to make one payment to clear the debt.

When you approach it this way, how much a discount the lender will give you, will depend on several factors. This may include how old the debt is; whether the creditor you owe the money is the original creditor, or a debt purchaser and, therefore, may have bought the debt themselves. Or, if the debt has proved hard to recover, the lender may be prepared to cut their losses.

Each case will be different, and some lenders may offer little to no discount, especially if they believe they can still recover the debt in full.

Make a Full and Final Settlement Offer to the Lender

Alternatively, another way of making a full and final settlement offer, is to take the funds you have available and divide what you owe with this amount.

So, if your debts are £10,000 and you have £5,000, you could offer each Creditor 50 pence in the pound.

The best way to do this is by telling your lenders who your other Creditors are, and how much you owe them and how much you are offering them.

This shows you are treating everyone fairly.

It can also help sometimes to tell them what the source of the funds is (and for money laundering purposes, they may ask).

If you don’t have the money yet, it will also help to tell them when you will receive it and when you can make the payment.

Many Lenders, if they accept a Full and Final Settlement offer, will expect it to be paid within a certain period and sometimes will only accept an offer, if the sum can be paid within a certain period.

If there are other mitigating circumstances, such as ill health, unemployment etc. it can also help to inform the Lender of this.

The best way to make an offer like this is through an Advice Agency, such as a Citizen Advice Bureau or Local Authority Money Advice Service.

Full Write Offs

Another type of Write Off is where you ask the Lender to write the debt off in full.

This is best done via an Advice Agency, as the Lender will normally want information about your circumstances, your income and expenditure and your ability to pay.

Writing a debt off is not a decision a lender will take lightly, but equally, lenders do agree to write debts off, when someone’s circumstances merit it.

Therefore, if someone is not able to repay their debts and this is not likely to change because they are ill (physically or mentally), retired, long-term unemployed etc. then requesting a debt write off may be an appropriate course of action to take.

When this is done, lenders may request further information, such as a Doctor’s letter. They are also likely to want an income and expenditure completed and returned.

Keeping Records

Whether it’s full Write Offs or Full and Final Settlements, it is important, if you get one, to keep copies of all correspondence and letters between you and the Lender, in case the debt re-appears at a later date and you require evidence it was settled.

Write Offs and Credit Scores

Debt Write Offs can damage your Credit Score, like other debt solutions.

The balance on your credit reference file may show a zero balance, but your account may also show it was only partially settled.

If you have previously missed payments or had a Default Notice, this may also show on your Credit reference File.

This may make it harder to obtain credit in the future.

Readers Questions

  1. Shona

    I have a lot of debt that I’m just coping with however I have had further letters from other companies. I am going to university in September and I know I cannot sustain what I’m paying. I am looking to a debt scheme however if I enter a scheme to write off some how will it work with my car which is on finance. Can I continue to pay this monthly or do I have to hand it back and enter the scheme?

  2. Blake

    Hi there, I live in Scotland and in Feb 2017 I took out a car on finance from black horse finance. I would say I paid off about a third of the loan, perhaps more. And then in 2018 I struggled to pay my varying loans and hit a sort of lull. I contacted black horse and they put me on a more affordable plan….however between family deaths, covid, personal struggles in-between I didn’t realise that the monthly payments from my account had stopped, it was coming out of an saving account. And when I realised I phoned them up in 2020 and they gave me an account and sortcode to pay into….. so I called again this year and was told the remaining amount of about 2500 had been written off…… I received no letter about this, no phone call….
    Is that it? Can they still take my car, I still own it…. can they issue me with a ccj? I’m so confused and I need advice.

    1. Scottish Adviser Post author

      Hi Blake

      I to be honest cannot tell you for certain, but if they are saying the debt is written off, then that is good news. I am assuming if the debt is written off, they have no intentions of pursuing you for it.

  3. Jill

    I live in Scotland. I have received a letter from a company called Cabot claiming that I have a debt of £9800 and demand payment. The letter is dated 3 weeks before I received it. I had debts from many years ago which I struggled to pay so I ended up using a debt management company. This company did everything for me but they stopped being a debt management company about 5 years ago. They had all information and I have no information regarding who the debts are to. If any have been cleared or how much is still outstanding. I do not know what to do about this situation and feel very frightened, worried that my life will be destroyed. I now have a partner and children who don’t know about this. I fear that if I tell them it will damage or even end our life together.

    1. Scottish Adviser

      Hi Jill

      Cabot are debt purchasers, so they normally buy debts from other companies, but they should be able to tell you who this debt was owed to.
      Don’t offer to pay them anything, until you can establish who it is it was owed to.
      They can also be required to provide you information about the debt and why it is the amount they say it is. This includes showing payments to it and the adding of interest and charges being added.
      Another thing that needs to be checked is when the last payment was made, as if it was more than 5 years ago, the debt may not be recoverable legally (*see here)
      The other issue is who this debt management company were. Around 2014/15 alot of these firms were put out of business, as the Financial Conduct Authority took over the regulation of them and many were not doing their job correctly. Some were not giving best advice and some not passing on payments to Creditors. I am not saying this is what happened to you, but I have my suspicions.
      What I would recommend is you get advice from your local free advice agency (see here). You could also write to Cabot and say you want to dispute your liability for this debt and request they put it on hold until they can provide more information.
      Also make a Subject Access Request (that is the term to use) under the Data Protection Act 2018. It is free to do and Firms must comply with it. Ask them when you make it to provide you with all information they have on you that relates to this debt.
      Also until you get this sorted, don’t admit your liability for this debt and don’t make any payments (see here about Statute Barred Debt).
      Ideally,the best thing to do is contact your local free money advice and see if there is a specialist money adviser who can help you dispute your liability for this debt.
      If I can help more I will, I can be contacted via messenger, but your local advice agency is best.

  4. Steve

    I had various credit card borrowing, loans about 20 years ago. My work and living circumstances changed drastically resulting in falling behind with payments. After a very aggressive, intrusive campaign from my debtors I used a Debt Management company which at the time was a great relief. In 2016 the Debt Management company were taken over by another company who did not continue with this type of service. As the DM had over the years all information and contact from the debts I realised I had no information at all. I contacted the new company for information but never received a reply. The last payment to the DM was October 2016. Today I received a letter from Cabot claiming to have purchased my debt for £11900.00 from The Co operative bank and are looking for repayment. I know I have not borrowed this amount though I remember taking a loan for a much smaller amount and I’m sure being informed years ago when trying to find out who I owed money to that I no longer had any debt with The Co operative Bank. However I have no records of any of this. My circumstances have improved though I have one year left before retirement which will be a state pension and a small work pension. I live in Scotland. I do not know what my next step should be and I have read many horror stories about Cabot.

    1. Scottish Adviser

      Hi Steve

      I am not sure who this Debt Management firm are. Some are okay, but some are really quite bad and can make your situation worse.
      They don’t always get the interest and fees stopped,so your debts can get worse and the fact they have not been in touch and just taking money from you is worrying.
      I would recommend you get a free copy of your credit reference file (see here about Statutory Credit Reports).
      I would also contact your local free advice agency and get some independent advice and also a second opinion from an impartial agency that are not motivated by making money off you.
      See Here for you local advice agency.

  5. Ross

    Hello There

    I lived in Scotland 13 years ago with my wife and family. My wife suddenly left the country, with my kids. I had to follow, or be left alone without my children. I left behind an overdraft on my bank account. I wish to return to Scotland, will I be able to open a bank account again? Any help greatly appreciated
    Kind regards

    1. Scottish Adviser

      Debts are normally written off after 5 years in Scotland, unless the Creditor took you to Court.
      They also fall off your credit report after 6 years.
      I don’t see a problem with you opening a new account on your return.
      Just use a different bank.
      You will require proof of your address and identity, however.

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