Interestingly, it doesn't matter whether by write offs or repayments. Either case is deflationary. This is due to the fact that money is created when credit/debt is created. When the debt is paid off, or the credit repaid, the money is then destroyed. The same occurs in write off.

The sad part about write offs is who ends up with the real property. It usually ends up in the hands of the bank. That's the same people who loaned out nothing and called it money, in exchange for a claim on real property.