![]() In this scenario, what happens if the customer can’t pay back the loan they borrowed plus the interest they’ve accrued? Your company has what is called “bad debt.”īad debt is a reality for businesses that provide credit to customers, such as banks and insurance companies. This is called credit risk and is typically reflected in the loan's interest rate the higher the risk level, the higher the interest rate. When you loan money to someone, there’s an inherent risk they won’t pay it back. ![]() If you send a debt and mental health evidence form (DMHEF), completed by a health or social care worker, your creditors may be more considerate when dealing with you.įind out more about debt and mental health.Imagine you work at a company that provides credit to its customers. If you're dealing with a mental health issue that can affect your ability to repay what you owe, it may help you to let your creditors know. In practice, instead of writing off the debt, creditors may simply agree to not contact you about the debt for an agreed period of time. They’re very likely to ask for proof, such as medical evidence, before they’ll consider this option. However, creditors are only likely to agree to writing off debts in the most serious cases. you can show evidence that it isn’t worthwhile or fair for them to keep pursuing the debt.they can see you have no assets that can be used to pay back the debt, or.they understand they’re unlikely to get repayments from you.If this happens to you, it may be worth asking your creditors to write off your debts. You could find yourself in this situation if you’re permanently unable to work or have a terminal illness. We often speak to people who can’t afford to pay anything towards their debts. All insolvency solution will have a negative effect on your credit file.įind out about the different debt solutions available to pay back or write off debt. Some insolvency solutions require you to pay a fee first, and there’s a risk of having to sell your house or car. Insolvency is legally binding and creditors included in the solution usually can’t do anything to get their money back.īut there are drawbacks as well. These insolvency measures have many advantages over trying to make agreements direct with your creditors to write off debts. ![]()
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