Individual Voluntary Arrangements (IVA)
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Ask your advisor for a personalised IVA example to see how much unsecured debt you could write off and calculate how much you could save per month!
We’ll ensure you only pay back what you can honestly afford, starting from £90/month
Never have to deal with scary phone calls or threatening letters from creditors demanding payment
No worrying about bills, payday loans, credit cards or debt collectors
“Without doubt the most professional Practitioners bar none. All conversations by email & telephone with both Marian & Zainab where extremely friendly & knowledgeable and not only put me at ease but gave me a better understanding of an IVA”
“Really quick to get IVA in place, Polite and interested in my problems and non-judgemental. Anyone who deals with this company will be able to stop worrying about creditors and will possibly be relieved of a lot of undue stress”
“When I first looked at this company the first person to call me (Steve) was very friendly and extremely helpful with understanding my situation. I didn’t realise I was in so much debt but now I am looking forward to a better financial future”
Although credit cards can be a great source of immediate income when you need it in urgent situations, if not managed correctly, missed payments combined with inefficient spending can quickly lead to raking up a significant amount of debt.
If you’ve become too overwhelmed with your credit card debts, and you believe you won’t be able to pay them back within a reasonable time frame, you may want to consider writing them off.
This article will go over what it means to write of debt, whether you quality to do it, and what the best methods are for doing so, depending on your financial situation
If your debt is written off, it means that your creditors (the people or company(s) that you owe money to) agree not to pursue you further to repay it.
Each debt write off is very individualistic, and many factors will be considered by your creditors before they decide to agree to write off your debts.
Some common situations which might influence whether your creditors agree to your debts being written off include: serious mental or physical health issues, unemployment as a result of something outside of your control, or potentially any other reason resulting in your inability to repay your debts.
If your creditors agree to write your debts off, you’ll then be completely exonerated from repaying them.
However, debt write off does result in some consequences.
Any write-offs will be recorded on your credit file, which will in turn harm your credit score and negatively impact your ability to be approved for loans in the future.
Yes, however, it is important to acknowledge that creditors will primarily want you to try and repay the full amount you owe them with any interest on top.
Debt write-offs are typically rare and difficult to obtain.
Yet, with that being said, there are situations where your creditors are more likely to agree to having your debts written off.
These can include:
If you think one of the above scenarios applies to you, in order to qualify, creditors will require you to provide evidence which clearly outlines why you won’t be able to pay them back in a reasonable time period.
This evidence should distinctly demonstrate that it would make more sense and be more beneficial for your creditors to cut their losses and relieve you of your debt responsibilities instead of pursuing you further to repay them.
Prior to looking into debt repayment plans (explained below), it might be worth first getting in contact with your creditors directly and seeing if they’re willing to negotiate a deal to settle your debts.
Remember, at the end of the day, creditors are people too, and if you can prove that you’re seriously struggling to pay them back, they may be more inclined to arrange a fair settlement.
An example of when you can arrange a fair and direct write off is by offering a final settlement for the remainder of your debts.
This is best suited if you have a lump sum available which would pay off part, or most, of your debts.
Creditors will likely be more willing to accept a part payment or agree for the rest to be written off if you have a guaranteed sum available to pay them.
If a direct deal to settle your credit card debts cannot be agreed upon, your only other option is to look into more formal insolvency and debt resolution methods.
Listed below are the different arrangements available:
Debt management plans allow you to repay your debts at an affordable rate.
You’ll need to get in contact with a DMP provider, who will be able to negotiate with your creditors a reasonable repayment amount each month.
Think of your provider as the middle-man who helps manage and organise your debt repayments.
DMP’s are particularly suited for non-priority or consumer debts, including credit cards, personal loans and overdrafts because of their focus on lower debt amounts, typically below £10,000.
Although debt write-offs are rarer with DMPs, it is advised that you look into them first before considering writing them off.
Having your debts written off should be viewed as a last resort, so if you can agree to a reasonable repayment plan we advise that to be your first option.
If, however, a DMP wouldn’t suit your financial position, it would be worth considering the below options:
Debt relief orders are similar to that of debt management plans but are more applicable for those who either are on a low income or possess few valuable assets.
DROs work by freezing your debt for a year to allow you to rebuild your finances.
If your financial situation hasn’t improved and you are still unable to pay off your debts after the allocated year, your debts will be completely written off.
An important note- IVAs are typically arranged for amounts above £20,000, and involve multiple types of debts, which is more unlikely to be the case for just credit cards.
However, if you have other debts alongside your credit card(s), an IVA will allow you to combine them together (so, this option will be worth looking more into).
IVAs are legally binding agreements between you and the people you owe money to (your creditors) which last on average, 5 years (but this period of time can be completely dependent on an individual’s agreement).
If you are consistent with your monthly payments and finish your agreed IVA term, you will qualify for the remainder of your agreed debts to be completely written off.
On average, IVA’s have written off between 50% and 60% of an average debt amount of £60,000, resulting in a £25,000-£30,000 reduction in the total amount previously owed.
Therefore, if you plan strategically and are dedicated to meeting your monthly repayments, you may be able to write off a significant chunk of your debts.
However, before being approved for an IVA, you must be able to evidence that you will be able to consistently meet monthly repayments over your agreed time period.
At the time of writing this article, creditors will expect at a minimum £70.00 a month to contribute towards your IVA.
Alternatively, some people, if they have the option, may prefer to provide a lump sum upfront (like a deposit) as a way to reduce their monthly repayments.
Once an agreement has been reached, all previous interest and charges on your debts will be stopped, and your creditors will be prevented from enforcing further penalties against you, including a petition for your bankruptcy.
Arguably the most well known type of insolvency, bankruptcy, if successful, will write off all your debts that are permitted to be included in a bankruptcy order.
This will include all your consumer debts such as credit cards, personal loans, as well as utility arrears and overdrafts.
If you have any assets of value, they’ll be assessed to see if they can be used to pay off your debts.
You’ll usually be able to retain essential tools or equipment which you might need to generate your income, such as your toolkit if you’re a tradesperson or car if it’s absolutely necessary for you to travel to work.
A final note- please remember that debt write off should be seen as a final resort if you are certain that you will be unable to repay your debts in a timely manner.
Although you’ll be cleared from repaying them, it will be recorded on your credit file, which will severely damage your future ability to retrieve credit.
However, if there is no other solution but having your debt written off, first get in contact with your creditors directly to see if you can organise a final settlement.
If that option isn’t available, it is advised to look into formal repayment plans such as a Debt Relief Order, Individual Voluntary Agreement or Bankruptcy.