diff --git a/src/components/ReportActionItem/MoneyRequestView.tsx b/src/components/ReportActionItem/MoneyRequestView.tsx
index 635d7e05ecf4..16d20853aa09 100644
--- a/src/components/ReportActionItem/MoneyRequestView.tsx
+++ b/src/components/ReportActionItem/MoneyRequestView.tsx
@@ -410,6 +410,14 @@ function MoneyRequestView({
                             if (!transaction?.transactionID) {
                                 return;
                             }
+
+                            const isCreateChatErrored = !!report?.errorFields?.createChat;
+                            if ((isCreateChatErrored || !!report.isOptimisticReport) && parentReportAction) {
+                                const urlToNavigateBack = IOU.cleanUpMoneyRequest(transaction.transactionID, parentReportAction, true);
+                                Navigation.goBack(urlToNavigateBack);
+                                return;
+                            }
+
                             if (transaction.pendingAction === CONST.RED_BRICK_ROAD_PENDING_ACTION.ADD) {
                                 if (chatReport?.reportID && ReportUtils.getAddWorkspaceRoomOrChatReportErrors(chatReport)) {
                                     Report.navigateToConciergeChatAndDeleteReport(chatReport.reportID, true, true);
diff --git a/src/libs/ReportActionsUtils.ts b/src/libs/ReportActionsUtils.ts
index 1aaa5cd7bfee..add379d462b0 100644
--- a/src/libs/ReportActionsUtils.ts
+++ b/src/libs/ReportActionsUtils.ts
@@ -1,7 +1,7 @@
 import {fastMerge} from 'expensify-common';
 import _ from 'lodash';
 import lodashFindLast from 'lodash/findLast';
-import type {OnyxCollection, OnyxCollectionInputValue, OnyxEntry, OnyxUpdate} from 'react-native-onyx';
+import type {NullishDeep, OnyxCollection, OnyxEntry, OnyxUpdate} from 'react-native-onyx';
 import Onyx from 'react-native-onyx';
 import type {ValueOf} from 'type-fest';
 import CONST from '@src/CONST';
@@ -10,8 +10,8 @@ import ONYXKEYS from '@src/ONYXKEYS';
 import type {OnyxInputOrEntry} from '@src/types/onyx';
 import type {JoinWorkspaceResolution, OriginalMessageExportIntegration} from '@src/types/onyx/OriginalMessage';
 import type Report from '@src/types/onyx/Report';
-import type {Message, OldDotReportAction, OriginalMessage, ReportActions} from '@src/types/onyx/ReportAction';
 import type ReportAction from '@src/types/onyx/ReportAction';
+import type {Message, OldDotReportAction, OriginalMessage, ReportActions} from '@src/types/onyx/ReportAction';
 import type ReportActionName from '@src/types/onyx/ReportActionName';
 import {isEmptyObject} from '@src/types/utils/EmptyObject';
 import DateUtils from './DateUtils';
@@ -715,10 +715,12 @@ function replaceBaseURLInPolicyChangeLogAction(reportAction: ReportAction): Repo
     return updatedReportAction;
 }
 
-function getLastVisibleAction(reportID: string, actionsToMerge: OnyxCollection<ReportAction> | OnyxCollectionInputValue<ReportAction> = {}): OnyxEntry<ReportAction> {
+function getLastVisibleAction(reportID: string, actionsToMerge: Record<string, NullishDeep<ReportAction> | null> = {}): OnyxEntry<ReportAction> {
     let reportActions: Array<ReportAction | null | undefined> = [];
     if (!_.isEmpty(actionsToMerge)) {
-        reportActions = Object.values(fastMerge(allReportActions?.[`${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${reportID}`] ?? {}, actionsToMerge ?? {}, true));
+        reportActions = Object.values(fastMerge(allReportActions?.[`${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${reportID}`] ?? {}, actionsToMerge ?? {}, true)) as Array<
+            ReportAction | null | undefined
+        >;
     } else {
         reportActions = Object.values(allReportActions?.[`${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${reportID}`] ?? {});
     }
@@ -732,7 +734,7 @@ function getLastVisibleAction(reportID: string, actionsToMerge: OnyxCollection<R
 
 function getLastVisibleMessage(
     reportID: string,
-    actionsToMerge: OnyxCollection<ReportAction> | OnyxCollectionInputValue<ReportAction> = {},
+    actionsToMerge: Record<string, NullishDeep<ReportAction> | null> = {},
     reportAction: OnyxInputOrEntry<ReportAction> | undefined = undefined,
 ): LastVisibleMessage {
     const lastVisibleAction = reportAction ?? getLastVisibleAction(reportID, actionsToMerge);
@@ -1534,92 +1536,92 @@ function getExportIntegrationActionFragments(reportAction: OnyxEntry<ReportActio
 }
 
 export {
+    doesReportHaveVisibleActions,
     extractLinksFromMessageHtml,
+    getActionableMentionWhisperMessage,
+    getAllReportActions,
+    getCombinedReportActions,
     getDismissedViolationMessageText,
-    getOneTransactionThreadReportID,
+    getFilteredForOneTransactionView,
+    getFirstVisibleReportActionID,
+    getIOUActionForReportID,
     getIOUReportIDFromReportActionPreview,
     getLastClosedReportAction,
     getLastVisibleAction,
     getLastVisibleMessage,
     getLatestReportActionFromOnyxData,
     getLinkedTransactionID,
+    getMemberChangeMessageFragment,
+    getMemberChangeMessagePlainText,
+    getMessageOfOldDotReportAction,
     getMostRecentIOURequestActionID,
     getMostRecentReportActionLastModified,
     getNumberOfMoneyRequests,
+    getOneTransactionThreadReportID,
+    getOriginalMessage,
     getParentReportAction,
     getReportAction,
+    getReportActionHtml,
+    getReportActionMessage,
     getReportActionMessageText,
-    getWhisperedTo,
-    isApprovedOrSubmittedReportAction,
+    getReportActionText,
     getReportPreviewAction,
     getSortedReportActions,
-    getCombinedReportActions,
     getSortedReportActionsForDisplay,
+    getTextFromHtml,
+    getTrackExpenseActionableWhisper,
+    getWhisperedTo,
+    hasRequestFromCurrentAccount,
+    isActionOfType,
+    isActionableJoinRequest,
+    isActionableJoinRequestPending,
+    isActionableMentionWhisper,
+    isActionableReportMentionWhisper,
+    isActionableTrackExpense,
+    isAddCommentAction,
+    isApprovedOrSubmittedReportAction,
+    isChronosOOOListAction,
+    isClosedAction,
     isConsecutiveActionMadeByPreviousActor,
     isCreatedAction,
     isCreatedTaskReportAction,
+    isCurrentActionUnread,
     isDeletedAction,
     isDeletedParentAction,
+    isLinkedTransactionHeld,
+    isMemberChangeAction,
     isExportIntegrationAction,
     isMessageDeleted,
     isModifiedExpenseAction,
     isMoneyRequestAction,
     isNotifiableReportAction,
+    isOldDotReportAction,
+    isPayAction,
     isPendingRemove,
-    isReversedTransaction,
+    isPolicyChangeLogAction,
+    isReimbursementDeQueuedAction,
+    isReimbursementQueuedAction,
+    isRenamedAction,
     isReportActionAttachment,
     isReportActionDeprecated,
     isReportPreviewAction,
+    isResolvedActionTrackExpense,
+    isReversedTransaction,
+    isRoomChangeLogAction,
     isSentMoneyReportAction,
     isSplitBillAction,
-    isTrackExpenseAction,
-    isPayAction,
     isTaskAction,
-    doesReportHaveVisibleActions,
     isThreadParentMessage,
+    isTrackExpenseAction,
     isTransactionThread,
+    isTripPreview,
     isWhisperAction,
     isWhisperActionTargetedToOthers,
-    isReimbursementQueuedAction,
-    shouldReportActionBeVisible,
     shouldHideNewMarker,
+    shouldReportActionBeVisible,
     shouldReportActionBeVisibleAsLastAction,
-    hasRequestFromCurrentAccount,
-    getFirstVisibleReportActionID,
-    isMemberChangeAction,
-    getMemberChangeMessageFragment,
-    isOldDotReportAction,
-    getTrackExpenseActionableWhisper,
-    getMessageOfOldDotReportAction,
-    getMemberChangeMessagePlainText,
-    isReimbursementDeQueuedAction,
-    isActionableMentionWhisper,
-    isActionableReportMentionWhisper,
-    getActionableMentionWhisperMessage,
-    isCurrentActionUnread,
-    isActionableJoinRequest,
-    isActionableJoinRequestPending,
-    getReportActionText,
-    getReportActionHtml,
-    getReportActionMessage,
-    getOriginalMessage,
-    isActionOfType,
-    isActionableTrackExpense,
-    getAllReportActions,
-    isLinkedTransactionHeld,
     wasActionTakenByCurrentUser,
-    isResolvedActionTrackExpense,
-    isClosedAction,
-    isRenamedAction,
-    isRoomChangeLogAction,
     isInviteOrRemovedAction,
-    isChronosOOOListAction,
-    isAddCommentAction,
-    isPolicyChangeLogAction,
-    getTextFromHtml,
-    isTripPreview,
-    getIOUActionForReportID,
-    getFilteredForOneTransactionView,
     isActionableAddPaymentCard,
     getExportIntegrationActionFragments,
     getExportIntegrationLastMessageText,
diff --git a/src/libs/actions/IOU.ts b/src/libs/actions/IOU.ts
index cb03f047e3d8..1e3f8e10eb7a 100644
--- a/src/libs/actions/IOU.ts
+++ b/src/libs/actions/IOU.ts
@@ -1,6 +1,6 @@
 import {format} from 'date-fns';
 import {fastMerge, Str} from 'expensify-common';
-import type {OnyxCollection, OnyxEntry, OnyxInputValue, OnyxUpdate} from 'react-native-onyx';
+import type {NullishDeep, OnyxCollection, OnyxEntry, OnyxInputValue, OnyxUpdate} from 'react-native-onyx';
 import Onyx from 'react-native-onyx';
 import type {ValueOf} from 'type-fest';
 import ReceiptGeneric from '@assets/images/receipt-generic.png';
@@ -5316,9 +5316,16 @@ function updateMoneyRequestAmountAndCurrency({
     API.write(WRITE_COMMANDS.UPDATE_MONEY_REQUEST_AMOUNT_AND_CURRENCY, params, onyxData);
 }
 
-function deleteMoneyRequest(transactionID: string, reportAction: OnyxTypes.ReportAction, isSingleTransactionView = false) {
-    const allReports = ReportConnection.getAllReports();
+/**
+ *
+ * @param transactionID  - The transactionID of IOU
+ * @param reportAction - The reportAction of the transaction in the IOU report
+ * @param isSingleTransactionView - whether we are in the transaction thread report
+ * @return the url to navigate back once the money request is deleted
+ */
+function prepareToCleanUpMoneyRequest(transactionID: string, reportAction: OnyxTypes.ReportAction, isSingleTransactionView = false) {
     // STEP 1: Get all collections we're updating
+    const allReports = ReportConnection.getAllReports();
     const iouReportID = ReportActionsUtils.isMoneyRequestAction(reportAction) ? ReportActionsUtils.getOriginalMessage(reportAction)?.IOUReportID : '-1';
     const iouReport = allReports?.[`${ONYXKEYS.COLLECTION.REPORT}${iouReportID}`] ?? null;
     const chatReport = allReports?.[`${ONYXKEYS.COLLECTION.REPORT}${iouReport?.chatReportID}`];
@@ -5353,11 +5360,11 @@ function deleteMoneyRequest(transactionID: string, reportAction: OnyxTypes.Repor
                 },
             ],
             originalMessage: {
-                IOUTransactionID: undefined,
+                IOUTransactionID: null,
             },
-            errors: undefined,
+            errors: null,
         },
-    } as OnyxTypes.ReportActions;
+    } as Record<string, NullishDeep<OnyxTypes.ReportAction>>;
 
     const lastVisibleAction = ReportActionsUtils.getLastVisibleAction(iouReport?.reportID ?? '-1', updatedReportAction);
     const iouReportLastMessageText = ReportActionsUtils.getLastVisibleMessage(iouReport?.reportID ?? '-1', updatedReportAction).lastMessageText;
@@ -5410,7 +5417,199 @@ function deleteMoneyRequest(transactionID: string, reportAction: OnyxTypes.Repor
         updatedReportPreviewAction.childMoneyRequestCount = reportPreviewAction.childMoneyRequestCount - 1;
     }
 
-    // STEP 5: Build Onyx data
+    // STEP 5: Calculate the url that the user will be navigated back to
+    // This depends on which page they are on and which resources were deleted
+    let reportIDToNavigateBack: string | undefined;
+    if (iouReport && isSingleTransactionView && shouldDeleteTransactionThread && !shouldDeleteIOUReport) {
+        reportIDToNavigateBack = iouReport.reportID;
+    }
+
+    if (iouReport?.chatReportID && shouldDeleteIOUReport) {
+        reportIDToNavigateBack = iouReport.chatReportID;
+    }
+
+    const urlToNavigateBack = reportIDToNavigateBack ? ROUTES.REPORT_WITH_ID.getRoute(reportIDToNavigateBack) : undefined;
+
+    return {
+        shouldDeleteTransactionThread,
+        shouldDeleteIOUReport,
+        updatedReportAction,
+        updatedIOUReport,
+        updatedReportPreviewAction,
+        transactionThreadID,
+        transactionThread,
+        chatReport,
+        transaction,
+        transactionViolations,
+        reportPreviewAction,
+        iouReport,
+        urlToNavigateBack,
+    };
+}
+
+/**
+ *
+ * @param transactionID  - The transactionID of IOU
+ * @param reportAction - The reportAction of the transaction in the IOU report
+ * @param isSingleTransactionView - whether we are in the transaction thread report
+ * @return the url to navigate back once the money request is deleted
+ */
+function cleanUpMoneyRequest(transactionID: string, reportAction: OnyxTypes.ReportAction, isSingleTransactionView = false) {
+    const {
+        shouldDeleteTransactionThread,
+        shouldDeleteIOUReport,
+        updatedReportAction,
+        updatedIOUReport,
+        updatedReportPreviewAction,
+        transactionThreadID,
+        chatReport,
+        iouReport,
+        reportPreviewAction,
+        urlToNavigateBack,
+    } = prepareToCleanUpMoneyRequest(transactionID, reportAction, isSingleTransactionView);
+
+    // build Onyx data
+
+    // Onyx operations to delete the transaction, update the IOU report action and chat report action
+    const onyxUpdates: OnyxUpdate[] = [
+        {
+            onyxMethod: Onyx.METHOD.SET,
+            key: `${ONYXKEYS.COLLECTION.TRANSACTION}${transactionID}`,
+            value: null,
+        },
+        {
+            onyxMethod: Onyx.METHOD.MERGE,
+            key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${iouReport?.reportID}`,
+            value: {
+                [reportAction.reportActionID]: shouldDeleteIOUReport
+                    ? null
+                    : {
+                          pendingAction: null,
+                      },
+            },
+        },
+    ];
+
+    if (reportPreviewAction?.reportActionID) {
+        onyxUpdates.push({
+            onyxMethod: Onyx.METHOD.MERGE,
+            key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${chatReport?.reportID}`,
+            value: {
+                [reportPreviewAction.reportActionID]: {
+                    ...updatedReportPreviewAction,
+                    pendingAction: null,
+                    errors: null,
+                },
+            },
+        });
+    }
+
+    // added the operation to delete associated transaction violations
+    if (Permissions.canUseViolations(betas)) {
+        onyxUpdates.push({
+            onyxMethod: Onyx.METHOD.SET,
+            key: `${ONYXKEYS.COLLECTION.TRANSACTION_VIOLATIONS}${transactionID}`,
+            value: null,
+        });
+    }
+
+    // added the operation to delete transaction thread
+    if (shouldDeleteTransactionThread) {
+        onyxUpdates.push(
+            {
+                onyxMethod: Onyx.METHOD.SET,
+                key: `${ONYXKEYS.COLLECTION.REPORT}${transactionThreadID}`,
+                value: null,
+            },
+            {
+                onyxMethod: Onyx.METHOD.SET,
+                key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${transactionThreadID}`,
+                value: null,
+            },
+        );
+    }
+
+    // added operations to update IOU report and chat report
+    onyxUpdates.push(
+        {
+            onyxMethod: Onyx.METHOD.MERGE,
+            key: `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${iouReport?.reportID}`,
+            value: updatedReportAction,
+        },
+        {
+            onyxMethod: Onyx.METHOD.MERGE,
+            key: `${ONYXKEYS.COLLECTION.REPORT}${iouReport?.reportID}`,
+            value: updatedIOUReport,
+        },
+        {
+            onyxMethod: Onyx.METHOD.MERGE,
+            key: `${ONYXKEYS.COLLECTION.REPORT}${chatReport?.reportID}`,
+            value: ReportUtils.getOutstandingChildRequest(updatedIOUReport),
+        },
+    );
+
+    if (!shouldDeleteIOUReport && updatedReportPreviewAction.childMoneyRequestCount === 0) {
+        onyxUpdates.push({
+            onyxMethod: Onyx.METHOD.MERGE,
+            key: `${ONYXKEYS.COLLECTION.REPORT}${chatReport?.reportID}`,
+            value: {
+                hasOutstandingChildRequest: false,
+            },
+        });
+    }
+
+    if (shouldDeleteIOUReport) {
+        onyxUpdates.push(
+            {
+                onyxMethod: Onyx.METHOD.MERGE,
+                key: `${ONYXKEYS.COLLECTION.REPORT}${chatReport?.reportID}`,
+                value: {
+                    hasOutstandingChildRequest: false,
+                    iouReportID: null,
+                    lastMessageText: ReportActionsUtils.getLastVisibleMessage(iouReport?.chatReportID ?? '-1', {[reportPreviewAction?.reportActionID ?? '-1']: null})?.lastMessageText,
+                    lastVisibleActionCreated: ReportActionsUtils.getLastVisibleAction(iouReport?.chatReportID ?? '-1', {[reportPreviewAction?.reportActionID ?? '-1']: null})?.created,
+                },
+            },
+            {
+                onyxMethod: Onyx.METHOD.SET,
+                key: `${ONYXKEYS.COLLECTION.REPORT}${iouReport?.reportID}`,
+                value: null,
+            },
+        );
+    }
+
+    Onyx.update(onyxUpdates);
+
+    return urlToNavigateBack;
+}
+
+/**
+ *
+ * @param transactionID  - The transactionID of IOU
+ * @param reportAction - The reportAction of the transaction in the IOU report
+ * @param isSingleTransactionView - whether we are in the transaction thread report
+ * @return the url to navigate back once the money request is deleted
+ */
+function deleteMoneyRequest(transactionID: string, reportAction: OnyxTypes.ReportAction, isSingleTransactionView = false) {
+    // STEP 1: Calculate and prepare the data
+    const {
+        shouldDeleteTransactionThread,
+        shouldDeleteIOUReport,
+        updatedReportAction,
+        updatedIOUReport,
+        updatedReportPreviewAction,
+        transactionThreadID,
+        transactionThread,
+        chatReport,
+        transaction,
+        transactionViolations,
+        iouReport,
+        reportPreviewAction,
+        urlToNavigateBack,
+    } = prepareToCleanUpMoneyRequest(transactionID, reportAction, isSingleTransactionView);
+
+    // STEP 2: Build Onyx data
+    // The logic mostly resembles the cleanUpMoneyRequest function
     const optimisticData: OnyxUpdate[] = [
         {
             onyxMethod: Onyx.METHOD.SET,
@@ -5611,20 +5810,11 @@ function deleteMoneyRequest(transactionID: string, reportAction: OnyxTypes.Repor
         reportActionID: reportAction.reportActionID,
     };
 
-    // STEP 6: Make the API request
+    // STEP 3: Make the API request
     API.write(WRITE_COMMANDS.DELETE_MONEY_REQUEST, parameters, {optimisticData, successData, failureData});
     CachedPDFPaths.clearByKey(transactionID);
 
-    // STEP 7: Navigate the user depending on which page they are on and which resources were deleted
-    if (iouReport && isSingleTransactionView && shouldDeleteTransactionThread && !shouldDeleteIOUReport) {
-        // Pop the deleted report screen before navigating. This prevents navigating to the Concierge chat due to the missing report.
-        return ROUTES.REPORT_WITH_ID.getRoute(iouReport.reportID);
-    }
-
-    if (iouReport?.chatReportID && shouldDeleteIOUReport) {
-        // Pop the deleted report screen before navigating. This prevents navigating to the Concierge chat due to the missing report.
-        return ROUTES.REPORT_WITH_ID.getRoute(iouReport.chatReportID);
-    }
+    return urlToNavigateBack;
 }
 
 function deleteTrackExpense(chatReportID: string, transactionID: string, reportAction: OnyxTypes.ReportAction, isSingleTransactionView = false) {
@@ -7163,11 +7353,12 @@ function getIOURequestPolicyID(transaction: OnyxEntry<OnyxTypes.Transaction>, re
 }
 
 export {
+    adjustRemainingSplitShares,
     approveMoneyRequest,
-    unapproveExpenseReport,
     canApproveIOU,
-    canIOUBePaid,
     cancelPayment,
+    canIOUBePaid,
+    cleanUpMoneyRequest,
     clearMoneyRequest,
     completeSplitBill,
     createDistanceRequest,
@@ -7175,19 +7366,24 @@ export {
     deleteMoneyRequest,
     deleteTrackExpense,
     detachReceipt,
+    dismissHoldUseExplanation,
     editMoneyRequest,
+    getIOURequestPolicyID,
     initMoneyRequest,
     navigateToStartStepIfScanFileCannotBeRead,
-    payMoneyRequest,
     payInvoice,
+    payMoneyRequest,
     putOnHold,
     replaceReceipt,
     requestMoney,
+    resetSplitShares,
     savePreferredPaymentMethod,
+    sendInvoice,
     sendMoneyElsewhere,
     sendMoneyWithWallet,
     setCustomUnitRateID,
     setDraftSplitTransaction,
+    setIndividualShare,
     setMoneyRequestAmount,
     setMoneyRequestBillable,
     setMoneyRequestCategory,
@@ -7199,34 +7395,29 @@ export {
     setMoneyRequestParticipantsFromReport,
     setMoneyRequestPendingFields,
     setMoneyRequestReceipt,
-    setSplitPayer,
     setMoneyRequestTag,
     setMoneyRequestTaxAmount,
     setMoneyRequestTaxRate,
-    dismissHoldUseExplanation,
-    updateMoneyRequestDate,
+    setSplitPayer,
     setSplitShares,
-    resetSplitShares,
-    setIndividualShare,
-    adjustRemainingSplitShares,
     splitBill,
     splitBillAndOpenReport,
     startMoneyRequest,
     startSplitBill,
     submitReport,
     trackExpense,
+    unapproveExpenseReport,
     unholdRequest,
     updateDistanceRequestRate,
     updateMoneyRequestAmountAndCurrency,
     updateMoneyRequestBillable,
     updateMoneyRequestCategory,
+    updateMoneyRequestDate,
     updateMoneyRequestDescription,
     updateMoneyRequestDistance,
     updateMoneyRequestMerchant,
     updateMoneyRequestTag,
     updateMoneyRequestTaxAmount,
     updateMoneyRequestTaxRate,
-    sendInvoice,
-    getIOURequestPolicyID,
 };
 export type {GPSPoint as GpsPoint, IOURequestType};