Welcome to DhanGuard. Can I help you?

Want To Know The Solution Of Bankruptcy – Loans Write Off? Let’s Find Out !

By Sakshi Srivastava - 28 May 2021 Last Updated: 11 Aug 2022
Want To Know The Solution Of Bankruptcy – Loans Write Off? Let’s Find Out !


Running a company or a business smoothly is a tedious task, when you are trying to avoid any kind of hindrances which might come in day to day work. Many a times it happens that these hindrances can be in the form of a bad debt! You wanted invest in a big project or acquire a sizeable chunk of another organization and you took a significant amount of loan from the bank or there can be any event for which you direly required that capital. But sadly the cards did not turn out in your favor and now you are burdened with a substantial amount of debt to pay back. That’s where the concept of write off could be helpful.

Don’t know what writing off of a loan means? Well today is your lucky day as you came to the right place. So without any further ado, let’s get to know what writing off is.

What is Write off?

Individuals can get a loan from banks and financial institutions to help them meet their numerous personal demands. A loan is an unsecured loan, which means the borrower does not have to put up any collateral to secure the loan in some cases. As a result, lenders carefully examine the borrower's eligibility and repayment capabilities. That is why lenders scrutinize a borrower's eligibility to determine his or her repayment capabilities. Lenders anticipate that borrowers will repay their loans within the agreed-upon time frame. However, a borrower may be unable to repay the debt not just during the term of the loan, but also after the term has ended.

So in layman’s terms Loan write-off is the process in which the bank can remove your debt or the leftover amount of loan in case if there arises a situation or an event due to which you are not able to fully make the repayment of the loan amount. So, if someone asks, "Can loan be wiped off?" the response is yes.

Read More ; Personal Loan Interest Rate and Personal Loan Calculator in Dubai

Issues you will face when bank decides to write off your loan-

So, you should now know the answer to your question concerning whether or not a loan can be wiped off, as well as what a loan write-off is. However, it is critical to be aware of the issues that may arise if your loan is written off, as this is not a good thing for your financial situation. When a lender writes off your loan, you must realize the gravity of the situation. We've listed some of the issues you might encounter here so you can understand them and take appropriate action. Check them out!

  • Lenders anticipate receiving a loan amount from a borrower within the agreed-upon time frame (months or years). However, if a borrower fails to repay the loan, the lender will wait a few months after the term has ended. If a borrower does not repay the loan amount within that time frame, the lender will write it off and report it to the credit agency with which it is affiliated.
  • If you have a ‘Written Off' on your credit record for a loan, it will lower your chances of acquiring any type of loan or credit card in the future. Simply said, it considerably reduces your credit worthiness. As indicated by your current status, you were unable to repay your previous loan, making it extremely risky for a lender to offer you with a new loan, or even a credit card.
  • If a lender writes off your loan, your credit score will suffer significantly, which is a negative point in your financial life. Lenders are wary of those with poor credit scores.


So, if your loan is written off by the lender, these are the issues you'll face. You must be considering what steps you may take to ensure that you pay your loan on time and that a loan write-off does not occur in the near future. In the following part, we'll go over all of the different ways you may make sure you pay your loan on time. Don’t forget to check them out.

Methods to Ensure On-Time Repayment of Loans

You can avoid a Loan Write-off issue if you pay your loan on time. Listed below are a few of the methods which you can implement.


In the case of any loan, interest rates have a significant impact on your repayment amount. A higher EMI would be the outcome of a higher interest rate. As a result, if you choose a lender that can provide a loan at a low interest rate, the EMI amount will be within your budget, making it easier to repay the loan on time. Always compare multiple lenders before deciding on the best one for you.


To make timely credit card repayments, an individual must also put a stop to their wasteful spending. When a person spends less money on frivolous items, he or she will have enough money to pay back the loan on time. In addition, there will be no loan write-offs.


Always select a loan amount that is within your repayment capability and only what you require. Taking out a larger loan than you need could result in a delay in payments, which could lead to default later. You can use a standard Loan Eligibility Calculator to determine the appropriate loan amount based on your monthly income. It is a useful tool for determining the maximum loan amount you are eligible for. A reasonable loan amount will automatically help you keep your EMI within your reach, allowing you to pay it on time.

Don’t get confused between write off and waiver-



Many times, when an individual requests for a loan and is unable to repay the loan due to financial difficulties, the government will forgive the debt. Of course, this is only done after a thorough investigation and background check to ensure that the borrower is truly unable to work and hence requires financial assistance. This occurs when farmers obtain loans for their farming operations but are unable to repay the debts owing to poor crop or climatic conditions. Waive offs, on the other hand, are subject to particular restrictions and circumstances. Officials conduct an investigation to assess the issue, and only then can they decide whether or not the loans should be forgiven. Anyone, not just farmers, can ask for a loan waiver provided they have a good reason.


Loan write-off means that the bank will write off the loan amount, but it does not indicate that the recovery process will be stopped. The fundamental idea behind this is to put the money that was originally set aside when lending money to its borrowers to use in their business. The bank's balance sheet looks better when a loan is written off. When the prospects of a defaulter repaying a loan are nearly nil and the debt's assets are non-performing, the Bank recommends that the loan be written off.

Is it true that writing off your debt lowers your credit score?

When a debt is written off in full, it is normally reported as paid on your credit report. If you miss any payments, pay less than the contractual agreement, or the account is defaulted before the balance is paid off, it will be stored in your file for six years. Creditors may be ready to forgive a portion of a debt if you promise to pay off the balance in a lump sum or over a period of time. This is called as a full and final settlement, and it will appear as a partial payment on your credit report. Your creditors are not obligated to accept your offer. The amount you can pay back will often determine whether or not they approve. Creditors, on the other hand, are more likely to agree to a partial settlement than to write off the entire debt.


Up until now you should be clear with what the meaning of write off is what kind of impact it can lay in your credit worthiness and financial image. Sure there are uncertainties and instability which no one can foresee or as the matter of the fact avoid them altogether. But practicing due diligence with the aforementioned steps can definitely avoid you from falling into the whirlpool of write offs as no one would want to entangle themselves with the agony of nonpayment of loans in a timely manner. We hope this elucidation of Write Offs can be used by you to secrete out maximum benefits.

By Sakshi Srivastava

28-May, 2021

Get Instant Advice