The truth about those “write off your debts” claims

Is it possible to have your debts cleared?

 
Type in “debt” or “debt help” and you will be faced with numerous paid listings in Google, advertising that they can help you ‘clear’ your debt with a ‘Government Scheme’. They will also claim to have interest frozen and to stop lenders contacting you, which is music to the ears of anyone dealing with the stress of being in debt. 
 
However, the reality is that Government does not run schemes aimed at encouraging people to amass large amounts of debt and then simply walk away. The schemes these advertisements are referring to are in fact legally-binding formal debt solutions which will have implications for your future credit-worthiness and even possibly your career.
 
The only real way to ‘write off’ debt is through one of either an Individual Voluntary Arrangement (IVA), Debt Relief Order (DRO), or bankruptcy.  In each of these solutions, only a percentage of the debt will be written off as you will still be expected to pay as much as you can reasonably afford to your creditors during the period that the solution is in force.  All of these solutions are also legally-binding and last for a certain period of time (between one and five years typically). 
 
No Financial Conduct Authority authorised firm is allowed to infer that they are affiliated with the government, so the organisations that use this kind of language are probably not organisations you would want to entrust your financial wellbeing to.
 
Many of the firms that make these claims in their advertising are known as lead generators.  This means that they are not licensed to provide financial advice themselves, they simply sell on your details to a commercial debt management firm that is.  What’s wrong with that? Nothing, except many commercial debt management firms will charge you to set up certain debt solutions, whereas a charity will not.
 
When trying to find a debt solution that will work for you, make sure you understand if there are any fees to be paid, if it is legally binding on all your creditors, if it will affect your employment, how long it will last, how it will affect your credit rating, and if your home will be at risk.
 
The most important thing to remember is that there is no single ‘right answer’ to debt - there is only the best solution for your circumstances.  
 
The answer is yes, the promise to have “your debts written off” is simply too good to be true, but there are many affordable debt relief options out there. 
 
Use our free, impartial debt advice service by calling 0800 043 40 50.