Getting debt written-off is where a bank or lender decides that it has little or no chance of collecting a debt, it will write it off as a loss.
To get your debt written-off, you will need to convince your lender that it is in their best interest as well as yours, which is not an easy task.
There are two main types of debt write off: partial and full. With a partial write off, you will still be responsible for repaying a portion of the debt. A full write off means that the bank no longer expects the borrower to repay the debt at all.
What Does It Mean To Have Debt Written-Off?
When you hear the term “write-off,” it usually means that you’re no longer responsible for repaying the debt. In other words, the debt has been forgiven.
However, this is not always the case.
Sometimes, a write off just means that the bank has written off the debt in their books but you’re are still liable for the debt. This means that the debt is still technically written off, but you may still have to pay it back.
However, typically, a write-off occurs when a credit card company, bank or lender decides that it has little or no chance of collecting a debt and writes it off as a loss. Essentially, a credit card debt write-off is an accounting tool that allows the creditor to declare the debt a worthless asset and deduct it as a loss.
What are the Types of Debt Write-Offs?
There are two main types of debt write off: partial and full.
With a partial write off, you will still be responsible for repaying a portion of the debt. The amount that is written off will depend on your agreement with the lender.
A full write off means that the bank no longer expects the borrower to repay the debt at all. This is usually only possible only if the debt is unsecured, such as credit card debt or a personal loan.
How To Get Debt Written-Off
It is not easy to convince lenders to give up their ability to collect a debt you owe to them and agree to write their debt off. Most creditors are commercially-minded and will want to look at the options they have to collect their debt.
To get debt written-off, you will normally have to convince a lender that writing off the debt is in their best interest as well as in yours. This usually means showing them why there is no likelihood of them getting enough money back to make it worth pursuing you for the debt any longer.
Most creditors are able to consider writing off their debt when they are convinced that your situation means that pursuing the debt is unlikely to be successful, especially if the amount is small. Even when writing off a debt is not an option for them, perhaps for legal reasons, they may decide not to recover the debt and effectively stop pursuing you for it.
You should firstly email your lender to discuss the situation, as even if they aren’t able to write-off your debt, you may be able to coordinate with them to find an arrangement whereby your terms are more favourable, or you get more time to repay your debts.
How Long Will a Lender Wait to Write-Off My Debt?
Typically, a lender will write off a debt when it considers it uncollectable. In some cases, this happens after you have not made any payments for at least six months, for others it can take longer.
However, each creditor has a different process for determining whether a debt is uncollectable. As a result, how long it takes before your debt is written off depends on your credit card company, your assets, and your payment history.
What is the Difference between a Debt Write-Off and a Debt Settlement?
It’s important to understand the difference between debt write off and debt settlement.
A debt settlement is when you negotiate with your lender to agree on a lower repayment amount. This can be a good option if you are struggling to make your minimum monthly payments.
With a debt write-off, the lender writes off the debt entirely. However, the bank can keep following up for payment or may assign a recovery agency to collect the dues. The recovery agency may hound you for years and hence debt write off should always be the last resort.