Writing off your debt signals the end of bad assets and Debt on the balance sheet of a bank. It is replaced by an equivalent fund. The financial statement of the bank will indicate that the written-off loans are compensated in some other way. This is needed to cleanse the balance sheet of the bank. Cleaning of the balance sheet means bad assets are replaced. From the banking angle, the term “write-off” is just an accounting term. It means the bank or lender doesn’t count the money borrower owes to it. The write-off for a defaulter doesn’t mean he is pardoned; rather legal actions against him will continue. You can analyze write-off from three angles: The bank – its balance sheet will improve. The defaulter – has to face consequences including legal actions. The general public – get a notion that taking loans and not repaying it is profitable. The best way is to understand the term from the angle of the bank because, it is the bank that must bear the burden, initiate the pro...