Can you write off debt or is this too good to be true?

April 4, 2018

If you are among one of the thousands of residents of Northern Ireland that struggle with problem debts every year, you may be wondering if there is any light at the end of the tunnel and if you are ever going to be debt free?

Whatever the reason for you getting into debt, if things have now reached the point where you can’t see any way of ever being able to pay them off, then you may have heard rumours about being able to write off your debts. But is this simply too good to be true?

Depending on your level of debt and your personal circumstances, there are in fact some debt solutions which will allow you to write off either all or a part of your debts. While this may sound extremely tempting there can be some serious consequences especially for your credit record, your ability to secure further credit in the future and can even have an effect on your ability to be employed in some professions.


Individual Voluntary Arrangements (IVAs)

An IVA is a formal agreement between you and your creditors where you pay one single affordable monthly payment towards your debts for a period of five or six years, after which time any remaining debts are written off. IVAs are administered by licensed insolvency practitioners who take your monthly payments and divide them out proportionally between your creditors so that those who are owed the most get paid a larger amount each month.

IVAs are generally suitable for people who have debts of at least £10,000 and can afford a payment of at least £100 per month after they have paid all of their essential bills. Most types of debt can be included in an IVA including both secured and unsecured debts such as; credit cards, bank loans and overdrafts, utility bills, personal loans, rates arrears, store cards, and catalogue debts.

However, there are some debts which either legally cannot be included in an IVA (such as magistrates’ court fines, child support arrears, court ordered maintenance arrears, and government backed student loans) or those that your creditor(s) will not agree to include in an IVA (such as mortgages and HMRC debts).

Although with an IVA you will be paying off some of your debts, a percentage of these will be written off at the end of the agreement and your monthly payments will be significantly reduced.

Debt Relief Order (DRO)

Debt Relief Orders are designed to help people on a low income and who have limited assets out of debt. If you qualify, your debts will be frozen for a year to give you time to try and find a way to pay off your debts. After that – if you are still unable to service your debts they will be written off.

To be eligible for a DRO you must:

  • Have debts of no more than £20,000
  • Be able to prove that you are unable to pay your debts as you have £50 or less left over each month once you have paid your essential household bills
  • Have assets of less than £1,000. This includes not owning your home, even if it is in negative equity, and you must not have a car that is worth more than £1,000 unless it has been specially adapted for your disability
  • You must have lived, or owned a business or a property, in England, Wales or Northern Ireland in the last three years
  • You have not been granted a DRO in the last six years and you must not currently be under any other form of insolvency procedure

Most debts can be included in a DRO (apart from magistrates’ court fines and confiscation orders, child support and maintenance, student loans and social fund loans), although if you are including any hire purchase agreement debts then you may have to give the goods to which these are relating back.

DROs cost £90 which you can pay instalments over six months if necessary and must be arranged by a Debt Relief Order advisor who will apply to the official receiver through the Northern Ireland Insolvency Service on your behalf. You can find a list of approved DRO advisors here.

Debt Relief Orders may seem like an attractive prospect, especially if you can’t see any other way of paying off your debts. However, it is important to remember that DROs will stay on your credit record for at least six years and during the term of your DRO your name will appear on the Insolvency Service’s Individual Insolvency Register. You also won’t be able to borrow more than £500 without declaring your DRO and you will need to get specialist permission from the court before you can set up or be otherwise involved in managing a business.


Bankruptcy is a formal debt procedure which allows you to write off debts that you cannot pay. During the terms of your bankruptcy (usually one year) your bank accounts will be frozen and any assets that you have will be sold to pay off as much of your debts as possible. Any debts remaining after this will be written off.

Bankruptcy is generally seen as a last resort if you have no other way of paying off your debts. Although your debts will be written off, the bankruptcy will remain on your credit record for at least six years and will severely affect your ability to obtain any further credit during this time. Being declared bankrupt can also affect your ability to hold some jobs.

Bankruptcy usually costs at least £700 to administer and must be managed by a licenced Insolvency Practitioner (IP). Once your bankruptcy has been agreed, your creditors are no longer able to contact you directly but must deal with your IP, who will take control of your finances and assets.

Bankruptcy can either be a voluntary process when you realise that you are no longer able to service your debts, or it can be forced upon you by any creditor to whom you owe more than £750. Although bankruptcy does have very severe repercussions on your financial future, it does allow you to let go of your current problems and start again with a clean slate.

Composition Order

Although these are rarely used in Northern Ireland, a Composition Order is a form of Administration Order which allows you to pay off a proportion of your debts over a set period of time, with any remaining debts being written off.

Administration Orders are managed by the Enforcement of Judgements Office (EJO) to whom you apply directly, stating the extent of your debts (which must be to at least two different creditors, one of which must be a CCJ) and your ability to make repayments. The EJO will then ask you to pay an affordable amount directly to them each month which they will then divide between your creditors. If the EJO decides that you will not be able to fully repay your debts in a reasonable time, they may grant a Composition Order which allows you to pay off a certain amount of your debt with the remainder being written off.


If you are struggling to pay your debts and feel that writing some, if not all, of them off is the only way that you will be able to move forward with your life, then contact the friendly advisers at Northern Ireland Debt Solutions today. We will talk you through all of your options before helping you to become debt free. Take the first step to securing your financial future and call Northern Ireland Debt Solutions on 0800 470 0461.

Lawrence O'Hara

Insolvency Adviser

Tel: 028 2132 6269

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