If you are finding it difficult to repay your loan, there are certain circumstances where it is possible for your loan to be written off. For instance, if your loan is significantly overdue and you are unable to find a way to repay it, or if you are receiving numerous calls, emails, and letters from the lender and wish for them to stop.

A loan is considered as written off when the lender decides to forgive your outstanding balance and states that you no longer have any repayment obligations. This can happen even if you have a small amount, like $30 or $50, left to pay, and they say, “Don’t worry, we’ll wipe it off,” leaving you with nothing left to pay.

Although it is not a common occurrence, there are a few avenues you can explore to potentially have your loan written off, such as declaring bankruptcy, having someone else pay off the loan on your behalf, being physically unable to generate income, or in the event of your death.

This guide from Pachyy provides comprehensive explanations of all the available options if you are seeking to get your loan written off.

If you are facing difficulties in repaying your loan, rest assured that there are always options available. You can find more information and guidance in our guide here.

Here are Some Types of Loans that May be Eligible for Loan Forgiveness:

• Payday loans
• Title loans
• Secured loans
• Personal loans
• Unsecured loans

If you are seeking loan forgiveness, it is worth considering these types of loans.

Options for Having Your Loan Written Off

1. Declare Bankruptcy

Consider filing for bankruptcy, as this legal process confirms your lack of funds and can halt the constant emails and letters from lenders. While your loan will still be due in most cases, lenders may be willing to accept small payments over time, and in some cases, they may even write off the debt altogether. It’s important to have a conversation with your lender to confirm the details.

2. In the Event of Your Passing

If you pass away, the responsibility for loan repayment may fall to your next of kin or your estate. However, this process can take time, and if the loan is significantly overdue, it could potentially be written off.

3. Claim Mis-selling of Your Loan

If you were granted a loan that you couldn’t afford or if your loan was repeatedly increased without proper checks, you might be eligible to make a claim for mis-selling. While this is less common in the US, in the UK, over $1 billion in payday loans have been written off, and individuals have received compensation. Consider consulting with an attorney to determine if you have a strong case and if this option could lead to the loan being written off.

4. Loan Repayment in Full

If someone, such as a parent or spouse, pays off your loan entirely, the debt can be written off. This can be an opportunity to negotiate with the lender and potentially settle for a lower amount. For example, your relative could offer to pay a portion of the total due and communicate that further repayment would be challenging. Some lenders may accept this and write off the remaining debt.

5. Lender Goes Out of Business

In the unfortunate event that the lender goes bankrupt or closes down, there may be a chance for the loan to be written off. When the company enters liquidation, they attempt to recover whatever they can, which could be a percentage of the loan amount. However, if the lender ceases to operate, there will be no active pursuit of repayment, providing an opportunity for negotiation and potentially settling for a reduced amount.

Is it Possible for Your Loan to be Written Off?

It can seem unfair to borrow money and then avoid paying it back. Remember, the lender has trusted you and provided you with a significant amount of money upfront.

However, there are some cases where your loan can be written off for valid reasons. One valid reason is if you have gone through bankruptcy or if you have received additional loans or top-ups without any further checks by the lender. If these top-ups or extensions were instantly approved, it may indicate that it was a no credit check loan, which could potentially make the loan void.

It is important not to assume that your loan has been written off. To confirm this, you should reach out to your lender and request written confirmation that there is no longer any outstanding balance.

A Helpful Guide on How to Have Your Loan Written Off

Step 1: Communicate with Your Lender

To start the process, it’s important to engage with your lender. Ignoring their emails, calls, and letters will only result in additional fees being added. Take the initiative to speak with them and discuss your situation. Be transparent about any bankruptcy or unemployment status. If you can only afford small amounts, come up with a plan (see plan below).

Step 2: Establish an Arrangement

An arrangement is a common method to gradually pay off an outstanding loan. This approach is recognized by all lenders. If you cannot make a one-time payment of $100, for example, consider paying off $20 per month for 5 months. Keep in mind that your credit score might be slightly affected, but this formal arrangement will eventually lead to your loan being written off.

Step 3: Present Your Case

If you believe that you were eligible for loans, credit, or top-ups based on your financial position, mental health, income, or employment level, you can consult with an attorney to formally present your case for having the loan written off. This approach has proven successful in the UK and can serve as a means to explore your options, especially if you owe a significant amount of money.