For some people, getting into debt is inevitable because of certain economic conditions or personal issues.
The not so good part is that there are instances wherein paying the debt you owe already becomes quite challenging to do so.
Stress-Free Ways to Write off Debt
This is where debt writes off comes in, which can help you repay your debts once and for all. This article tackles some of the stress-free ways for you to write off your debts.
1. Debt Management Plan (DMP)
One of the primary things that you can do to write off your debt is to consider a debt management plan. A DMP will allow you to pay back the debts that you owe at an affordable rate. In this case, you may need to make a single monthly payment to the DMP provider, who will then distribute it to your creditors.
Rest assured that your DMP provider will work out an affordable payment that is agreeable to your creditors. This is suitable for non-priority debts such as those unsecured ones.
In some countries in the world, such as in Scotland, DMP is similar to the combination of all of your unsecured debts such as credit card charges and personal loans into a single affordable payment.
This is accomplished through trust deeds, which can only be administered by a licensed insolvency practitioner, interacting with your creditors on your behalf. Before you decide to pursue DMP, though, make sure that you have consulted a seasoned debt adviser to help you make the right decisions.
2. Debt Relief Order (DRO)
Another stress-free way to write off your debts is through a debt relief order (DRO). This is viable if you have a low income with a few assets. In this case, a DRO will freeze your debt for at least a year before it is written off completely in case your circumstances haven’t changed.
There is a great chance for your creditors to agree to a DRO if they deem that it is unlikely that you will be able to make any more payments.
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3. Individual Voluntary Agreement (IVA
An individual voluntary agreement (IVA) is another way to write off your debt by allowing you to pay back what you can afford. With an IVA, you and your creditors need to agree on a certain amount of money you have to pay back within a certain time frame, usually anywhere between five to six years.
The amount of your debt not included in the agreement is already written off in this case, and your creditors won’t be able to chase you for it as soon as they sign in to the agreement.
Declaring bankruptcy is another way to write off your debts, paving the way for you to make a fresh start. To apply for bankruptcy, you need to provide information about your debts, income, and outgoings. Just keep in mind that when you do declare bankruptcy, any assets that you own may be taken away from you to pay off the debts that you owe.
This means that a couple of weeks after you receive your bankruptcy order, an official receiver will assess your income and assets to see how these can be used to meet your debts.
5. Final Settlement Offer
In case you have a certain lump sum that you can use to pay off the debts that you owe your creditors partially, you can draft a final settlement offer like a debt settlement program. If your creditors agree in this case, as soon as you have paid the lump sum, the rest of the debts that you owe will be written off.
Otherwise, your creditors can also allow you to make monthly payments for a specific time frame instead of a lump sum before the rest of your balance is written off.
6. Administration Order
Finally, you can also consider an administration order, particularly if what you owe doesn’t exceed £5,000 in total. In this case, it is the County Court who will distribute the payment you have made to your creditors.
There are several ways on how you will be able to write off your debts as necessary, such as those listed above. However, the key is to ensure that you have already worked out the true cost of the process before you borrow.
In this way, you will be able to avoid high fees as well as hidden costs that may have a significant impact on the amount of money that you have to pay back. Alongside this, make sure that you have already worked out a repayment plan to ensure that you won’t have to undergo debt write-offs in the future.
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