Are creditors legally required to write off a debt?

No. Writing off a debt is entirely at the creditor's discretion. However, the FCA's Consumer Duty requires regulated firms (banks, credit card companies, loan providers) to treat customers in financial difficulty fairly. Many creditors will write off debts where the cost of recovery exceeds the amount owed, or where the debtor has no realistic prospect of repaying. Council tax debts and utility debts may also be written off at the discretion of the council or utility company.

What is Breathing Space and how can it help me?

The Debt Respite Scheme (Breathing Space), introduced in May 2021 under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, gives individuals in financial difficulty a 60-day period during which creditors must freeze interest and charges, stop enforcement action, and cease contact requesting payment. You must apply through a debt advice provider such as StepChange or Citizens Advice.

Will a debt write-off affect my credit score?

If the debt has already been recorded as a default on your credit file, a write-off will not make your credit score worse — the default is the main negative marker. The account will be recorded as 'settled' or 'partially settled' rather than 'satisfied', which is slightly less favourable. However, both the default and the settlement will be removed from your credit file after six years.

What evidence should I include with my write-off request?

Include any evidence that supports your claim of financial hardship, such as: benefit award notices (Universal Credit, ESA, PIP), redundancy letters, medical certificates, bank statements showing your income, a full income and expenditure statement, and evidence of any other debts. The more evidence you provide, the more likely the creditor is to take your request seriously.

Can I request a write-off if I am in a Debt Management Plan or IVA?

If you are already in a formal Debt Management Plan (DMP) or Individual Voluntary Arrangement (IVA), your debt adviser will typically negotiate with creditors on your behalf. You can still request a write-off independently, but it is advisable to discuss this with your debt adviser first, as it could affect your existing arrangement.

Where can I get free debt advice in the UK?

Several organisations offer free, impartial debt advice: StepChange Debt Charity (0800 138 1111), Citizens Advice (citizensadvice.org.uk), National Debtline (0808 808 4000), and the Money Adviser Network. These organisations can help you assess your options, apply for Breathing Space, and negotiate with creditors on your behalf. Avoid commercial debt management companies that charge fees.

Free Debt Write-Off Request Letter Template (UK)

A debt write-off request letter is sent by a debtor to a creditor asking them to write off (cancel) an outstanding debt due to financial hardship.

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Personal Information

Your Full Name*

Your Address*

creditor

Creditor Name*

Creditor Address*

debt-details

Account / Reference Number*

Outstanding Debt Amount (£)*

hardship

Reason for Financial Hardship*

Explain your circumstances in detail. Include any relevant events such as job loss, illness, bereavement, or relationship breakdown.

Total Monthly Income (£)*

Total Monthly Essential Expenditure (£)*

Disposable Income (£)*

Your monthly income minus essential expenditure.

I am enclosing supporting evidence

List of Supporting Evidence Enclosed

execution

Date of Letter*

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[debtorName] [debtorAddress] [date] [creditorName] [creditorAddress] Dear Sir or Madam, REQUEST TO WRITE OFF DEBT — ACCOUNT: [accountNumber] I am writing to request that you consider writing off the outstanding balance of [debtAmount] on the above account due to my current financial circumstances. 1. MY CIRCUMSTANCES [hardshipReason] 2. FINANCIAL SUMMARY My current financial position is as follows: Total monthly income: [monthlyIncome] Total monthly essential expenditure: [monthlyExpenditure] Disposable income: [disposableIncome] As you can see, I have very limited disposable income and am unable to make meaningful payments towards this debt. The cost to you of continued recovery action is likely to exceed any payments I could realistically make. 3. WHAT I AM ASKING I respectfully ask that you write off the balance of [debtAmount] on account [accountNumber] in its entirety. I understand that you are not obliged to do so, but I hope you will consider my request given my circumstances. If you are unable to write off the full amount, I would ask that you consider: (a) Writing off a proportion of the debt; (b) Accepting a reduced lump sum in full and final settlement (if I am able to obtain assistance from a charitable fund); (c) Freezing all interest, charges and enforcement action on the account. 4. SUPPORTING EVIDENCE I enclose the following documents in support of my request: [evidenceList] 5. ADDITIONAL INFORMATION I have sought free debt advice from [StepChange / Citizens Advice / National Debtline] and they have confirmed that a write-off request is appropriate given my circumstances. I am happy to provide any further information you may require to consider my request. Please contact me at the address above. I would be grateful if you could confirm your decision in writing within 30 days of the date of this letter. Thank you for your consideration. Yours faithfully, ___________________________ [debtorName] Account reference: [accountNumber] Date: [date]

Important Notes

Legal Disclaimer

Creditors are not legally obliged to write off debts, but many have internal policies for doing so in cases of genuine financial hardship. The Financial Conduct Authority (FCA) Consumer Duty and the FCA's principles for debt collection (CONC 7) require regulated firms to treat customers in financial difficulty with forbearance and due consideration. The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 provides a 60-day breathing space for individuals in financial difficulty, during which creditors must pause enforcement, freeze interest and charges, and not contact the debtor to request payment. A mental health crisis breathing space provides protection for the duration of treatment plus 30 days. Local authorities have discretionary powers to write off council tax debts under the Local Government Finance Act 1992. Utility companies are expected to follow the Water Industry Act 1991 (for water companies) and Ofgem guidelines (for energy companies) regarding customers in financial difficulty.

This template is provided for informational purposes only and does not constitute legal advice. For complex legal matters, we recommend consulting a qualified solicitor.

Frequently Asked Questions

Related Templates

Financial Hardship Letter Payment Plan Proposal Letter Letter Before Action (LBA)