Credit Card Debt Forgiveness Programs

Programs exist that can reduce your credit card balance without requiring you to pay every dollar you owe.

Credit card debt relief programs are structured arrangements where your creditors agree to accept less than the full balance you owe. The remaining balance is forgiven, meaning you are no longer responsible for paying it. This process is more commonly known as debt settlement or debt negotiation. What Is Credit Card debt relief Credit card debt relief programs are structured arrangements where your creditors agree to accept less than the full balance you owe. The remaining balance is forgiven, meaning you are no longer responsible for paying it. This process is more commonly known as debt settlement or debt negotiation. These programs are not government programs and they are not free. A professional negotiation team works with your creditors on your behalf, and fees are charged only after a successful settlement is reached. However, the savings typically far exceed the cost of the program. How Much Debt Can Be Forgiven Most successful settlements result in the consumer paying 40% to 60% of their original balance. For a $20,000 credit card balance, that means the creditor agrees to accept $8,000 to $12,000 as payment in full. The remaining $8,000 to $12,000 is forgiven. The exact amount forgiven depends on the creditor, how long the account has been delinquent, and the strength of the negotiation. Some creditors are more willing to negotiate than others. Qualification Requirements To qualify for a debt relief program, you generally need $7,500 to $10,000 or more in unsecured debt. Credit card balances, medical bills, unsecured debt, and collection accounts are all eligible. You do not need good credit to enroll. Many clients enter the program after falling behind on payments. You do need the ability to make regular monthly deposits, even if they are smaller than your current minimum payments. These deposits fund the settlement offers that are presented to your creditors. Important Considerations There are two key things to be aware of. First, your credit score will be affected during the program, particularly if you stop making minimum payments. Second, the IRS considers forgiven debt above $600 as taxable income, which may result in a tax liability. For many consumers, these trade-offs are worth it compared to the alternative of decades of minimum payments or filing for bankruptcy. A free consultation with a debt specialist can help you weigh the pros and cons.

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