Can you write off debt in Scotland?
Some Scottish debt solutions can end with debts written off, but only if you meet strict conditions, and never for every kind of debt. Here is the honest picture.
Some Scottish debt solutions can end with debts being written off, but only if you meet strict conditions, and never for every type of debt. A protected trust deed, sequestration (bankruptcy in Scotland) and the Minimal Asset Process can end with the remaining debts included being written off when you are discharged. The Debt Arrangement Scheme and debt management plans do not: they repay your debts in full.
No one can promise you a write-off. This page explains how it works, what it costs you, and what to watch out for. It is general information, not advice about your situation.
Which Scottish solutions can end with debts written off?
In Scotland, “written off” usually means discharged: at the end of a formal solution, you are released from the debts that were included in it. Three solutions can end this way.
| Solution | Can debts be written off? | Main conditions and costs |
|---|---|---|
| Protected trust deed | The remaining debts included, when you are discharged at the end | You must keep up your contributions, usually for 48 months, and co-operate with your trustee. Discharge is not automatic. There are fees, and homeowners may need to release equity |
| Sequestration | Debts you had at the date of sequestration, when you are discharged, usually after 12 months | You may still pay a contribution for 48 months. Bankruptcy restrictions apply. A £150 application fee unless it is waived |
| Minimal Asset Process (MAP) | Debts you had at the date of sequestration, on discharge after 6 months | Only for debts up to £25,000, very few assets and a low income. Some restrictions last another 6 months |
A protected trust deed
A trust deed is a legal agreement in which you pass your estate to a trustee, a licensed insolvency practitioner. If it becomes protected and you meet your obligations, your trustee applies for your discharge and it takes effect when the Accountant in Bankruptcy (AiB), Scotland’s insolvency service, registers it. At that point the remaining debts included in the trust deed are written off.
That outcome is conditional. AiB can refuse discharge, and if it is refused, creditors are free to take steps to recover what you owe. If the trust deed fails before the end, creditors can start asking for payment again and may add fees, and your trustee can petition for your sequestration. A trust deed also affects your credit rating for six years, your name goes on the public Register of Insolvencies, and not all debts can be included. See getting discharged from a trust deed.
Sequestration and MAP
When you are discharged from sequestration, you are released from the debts you had at the date of sequestration, with some exceptions. Discharge usually comes after 12 months, but any contribution you have been asked to pay can carry on for 48 months from your first payment. MAP is a simpler form of sequestration, with discharge after 6 months. Both are bankruptcy, so while they last you cannot be a company director, an MP, a councillor or a Justice of the Peace, and bankruptcy can stay on your credit file for at least 6 years. See sequestration.
Which solutions repay your debts in full?
Some Scottish options do not write off what you borrowed.
- The Debt Arrangement Scheme (DAS). You repay the debts included in full through a debt payment programme. What DAS does write off is the interest, fees and charges, which are frozen from the date you apply and written off when you complete the programme. It is free to set up through a money adviser. See the Debt Arrangement Scheme.
- A debt management plan. An informal plan to repay your debts at an affordable rate. Creditors do not have to freeze interest, and you still owe everything.
- A consolidation loan. New borrowing to pay off old debts. You repay everything, plus interest on the new loan.
- A moratorium. Six months of protection from diligence (legal enforcement such as arrestments) while you get advice. It does not write off anything, and it does not freeze interest.
Repaying in full has its own advantages. DAS, debt management plans and consolidation loans do not put you on the Register of Insolvencies (DAS has its own public DAS Register instead), and in DAS you do not have to sell your home or use your savings.
Which debts are never written off?
Even when a formal solution ends with a discharge, some debts survive. Under the Bankruptcy (Scotland) Act 2016 and AiB guidance, these include:
- fines, penalties and compensation orders imposed by a court;
- debts arising from fraud or breach of trust, including benefit overpayments caused by fraud;
- aliment, meaning financial support you must pay for a child or a former partner;
- student loans;
- debts you take on after the trust deed or sequestration starts, such as ongoing rent, council tax and utility bills.
Secured debts, such as a mortgage, are also treated differently. A discharge does not take away the lender’s right to enforce its security over your home, so you still need to keep up the payments if you want to keep it.
If someone else owes a debt jointly with you, or guaranteed it, AiB says creditors may still take action against them after your bankruptcy. How other debts owed to the Department for Work and Pensions are treated needs checking with an adviser. See which debts can go into a trust deed.
Want to know what could happen to your own debts? Tell us a little about your situation and a licensed insolvency practitioner firm will call you to go through every option, including ones that are not a trust deed.
May not be suitable in all circumstances. Fees apply. Your credit rating may be affected. Free, impartial advice is available from MoneyHelper and other services.
Can creditors agree to write off a debt?
Yes, sometimes, outside any formal solution. But they do not have to, and there is no guarantee.
Asking for a write-off. National Debtline says creditors may consider writing off a debt when they are convinced there is no realistic prospect of getting worthwhile payments, especially if the amount is small. Examples include renting your home with no spare income, savings or assets; serious or long-term illness or disability; living on benefits and needing a carer; or being retired on a limited income. You would normally send a budget and any evidence, such as a letter from a doctor or social worker. A creditor might agree, refuse, or just put the debt on hold, in which case it is not written off and they could pursue it again later.
Full and final settlement. If you can raise a lump sum, you can offer it to a creditor in return for writing off the rest. National Debtline stresses getting the creditor’s acceptance in writing before you pay anything. Priority creditors, such as for council tax or rent arrears, are unlikely to agree. If you might need a formal solution later, payments that favour one creditor can cause problems, so get advice first.
Either way, the account will usually show as a default or a partial settlement on your credit file.
Very old debts. Under Scots law, many debts are extinguished if five years pass without a payment, a written acknowledgement or a court claim. This is called prescription. It does not apply to debts where a court has granted a decree, and council tax arrears can be pursued for much longer. The rules are technical, so see statute-barred debt in Scotland and ask an adviser to check.
Why are write-off adverts a warning sign?
You may see adverts promising to “write off” a large share of your debt, sometimes with a percentage. Treat them with caution.
- A percentage cannot be known in advance. In a trust deed, what creditors get depends on your income, your assets, the fees and whether you keep to the terms for the whole period.
- Regulators have acted on it. The Advertising Standards Authority (ASA) has told insolvency practitioners and lead generators not to make write-off percentage claims unless they can back them with evidence from their own customers. The FCA warns that some debt adverts make misleading claims about how much debt you can write off, or call a solution “government backed”.
- Adverts leave things out. Fees, the effect on your home, your credit rating and the public register rarely feature in the headline.
This site does not quote write-off percentages and cannot promise any outcome. Before you agree to anything, the FCA advises checking that a firm is authorised on its Financial Services Register, and that an insolvency practitioner is licensed.
Free, impartial advice is available from free debt advice services in Scotland, and they will look at every option with you, including ones that repay in full.
Official sources
- Bankruptcy (Scotland) Act 2016, section 145: effect of discharge
- AiB: what happens to my debts after I am discharged?
- National Debtline: write off debt (Scotland)
- National Debtline: full and final settlement offers (Scotland)
- Prescription and Limitation (Scotland) Act 1973, section 6: five-year prescription
Common questions
How much of my debt can be written off in Scotland?
Nobody can honestly tell you in advance. In a trust deed or sequestration, what you pay depends on your income, your assets and the costs, and anything written off depends on you meeting the conditions to the end. Some debts are never written off at all. Treat any advert or caller that quotes you a figure before looking at your full situation with caution.
Is there a government debt write-off scheme in Scotland?
No. Protected trust deeds, sequestration and the Minimal Asset Process are legal processes under Scots law, supervised by the Accountant in Bankruptcy. They are not government offers to write off debt. The FCA has warned that some adverts wrongly describe debt solutions as government backed, and advertising rules say such claims should not be made.
Will writing off debt affect my credit rating?
Yes. A protected trust deed affects your credit rating for six years from the date it begins, and bankruptcy can stay on your credit file for at least six years. Even a debt a creditor agrees to write off voluntarily is usually recorded as a default, which National Debtline says can affect your access to credit for up to six years.
Can a creditor write off my debt if I have no money?
They can, but they do not have to. National Debtline says creditors may consider it where there is no realistic prospect of you paying, for example if you rent, have no spare income or savings, and live on benefits, or have a serious long-term illness. You usually need to send a budget and any supporting evidence. A creditor may refuse or simply put the debt on hold.
Related guides
- Getting discharged from a trust deed How debtor and trustee discharge work, what is written off, refusals and early discharge.
- Sequestration (bankruptcy in Scotland) How bankruptcy works in Scotland, who can apply, what it costs and what it means for you.
- The Debt Arrangement Scheme (DAS) Repay your debts in full through one payment, with interest and charges frozen.
- Statute-barred debt in Scotland The 5-year prescription rule, what restarts it and which debts last 20 years.