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What is debt relief? Can it reduce my debt?

If you’re struggling to deal with your debts, reducing the amount you owe make a big difference.  Steps you can take to reduce or write off your total debt are sometimes known as ‘debt relief’.

There are two main ways to get debt relief - discretionary arrangements, which a creditor may agree to in some circumstances, and formal insolvency solutions.

Discretionary debt relief

Your creditors may agree to write off part of your debt – or in some cases all of it – in the following circumstances:

  • There’s no way you can realistically pay them anything

    If you have no assets and no money left after your priority bills and living costs, and this is not going to change, a creditor may decide it’s not worthwhile chasing you for money you don’t have.

  • Your situation means it’s not appropriate to keep pursuing the debt

    Creditors may agree to write off a debt if continuing to collect it would have a detrimental effect on your mental or physical health. An example of this is if you have a terminal illness, as it may not be fair to keep asking for payments.

  • You can pay them a lump sum

    Sometimes creditors will agree to accept a percentage of the outstanding debt in one lump sum and then write off the remainder. This is often known as a full and final settlement.

None of these options are guaranteed and your creditors could still refuse. They might also want further information from you before making a decision.

If they agree to write off part or all of a debt this may have an effect on your credit file and your ability to get future credit if your circumstances change.

Insolvency debt relief

There are several types of insolvency which offer guaranteed debt relief.

England, Wales and Northern Ireland


Each of these insolvency solutions will write off part, or all of your debts. Once the solution is set up most creditors are bound by it so they can’t continue to pursue you directly. In some cases, you’ll need to make agreed payments for a fixed time, but these will be based on your ability to pay.

However, there are benefits and risks with all insolvency debt solutions, and they may not be suitable for your situation. All insolvency solutions have a serious impact on your credit file, you may lose any valuable assets, and in some cases your home or job could be at risk.

This means it’s important to get impartial and expert debt advice before considering insolvency. There may be better options available for you.

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How we can help you get debt relief

If you want to find out more about discretionary debt relief or insolvency, contact us

We’ll help you prepare a budget and work out what options there are to deal with your debts.  If that means insolvency or negotiating with creditors to write off debts is the best solution, we can help.

Use our online debt advice tool or call us to speak to one of our advisors. Calls are free from all landlines and mobiles.

Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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*This is the average rating of our service based on the StepChange reviews on Feefo by DMP and DRO clients three months into their solution.

© StepChange Debt Charity 2019