Write Off Debt And Mental Health

Write Off Debt And Mental Health

Lending industry codes of the practice suggest creditors should consider writing off debt if:

  • You are very unwell,
  • You are unlikely to recover soon, and
  • You have no way of repaying the debt.

If you feel this applies to your individual circumstances, you could request that your creditors write off the debt. Typically, you would do this in writing and send some medical evidence of your condition. You could ask your doctor, psychiatrist, or another health professional to assist you with your medical evidence. You should also send your budget sheet outlining your income & expenditure to show you cannot afford to pay your debts.

Some creditors may agree to write off debt however others may not but could agree to mark your account as non-collectable so they will not chase you to repay your debt while your circumstances remain the same. Some creditors won’t contact you at all if your debt is non-collectable while others will contact you every so often to ask about your current financial situation.

Important points to consider:

  • Creditors do not have to write off debt.
  • Creditors will want to see evidence of this – usually in the form of a budget sheet and medical evidence of any mental illnesses. Creditors may also ask for a Debt and Mental Health evidence form.
  • Getting creditors to agree to write off debts can be a long process with no guarantee of success. It may take less time and effort to use another option such as bankruptcy, debt relief order or an individual voluntary arrangement (IVA).
  • If a creditor confirms they will, it will still show on your credit reference file as unpaid. This could make it more difficult for you to get credit in the future.

Evidence Form

The Debt and Mental Health Evidence Form (DMHEF) is a standard form.

It is used to ask health and social care professionals for evidence of your circumstances.  It was designed to make it easier to collect this information for you and your creditors.

Once the form is completed, it can be photocopied and sent to all your creditors.

The DMHEF is usually given to you by a debt adviser or your creditors. You can get a copy from the people who designed it, the Money Advice Liaison Group (MALG), but MALG can’t help you with it or answer questions, they just helped design the form.

When writing your letter to request a write off debt, include information about your personal circumstances including:

  • The period you have been unwell,
  • The condition of your mental health was like when you took out the agreement,
  • Outline any changes of circumstances that have negatively impacted your ability to repay (e.g., having less money coming in, working fewer hours, leaving your job, becoming unwell recently),
  • Explain how your debts affect your mental health
  • Provide information on any recent hospital stays.

Below is a sample letter you can use to ask to write off debt:

You can use this letter to send to a creditor or debt collection agency to ask them to write off debt. 

Your name

Your address

Date

Creditor Name

Creditor Address

[Account / card / loan reference number]

Dear Sir/madam

I am writing about the above account to which I currently owe XXX (insert debt amount here).

I am sending a copy of a recent personal budget sheet which shows that I am unable to offer any payments. I also enclose (a letter from inserts name and profession of the health or social care professional who has provided evidence/a Debt & Mental Health Evidence Form) which describes my mental illness and how this affects my ability to manage my finances.

Unfortunately, my financial circumstances are unlikely to change due to my health issues. I am unable to make an offer of repayment towards my debt, so I am asking that you kindly consider writing this debt off or mark it as uncollectible, depending on your internal policy.

When considering my request, I would also like you to consider the following information (insert information here about your mental health condition and how having the debt is impacting you).

If you decide it is not appropriate to write off debt, I would like you to explain in writing how you have come to this decision.

Yours faithfully,

Add your name

To speak with a debt advisor contact Debt Support Direct by Clicking Here.

Free and impartial money advice is available from the Money Helper, an organisation set up by the Goverment for people in debt.