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In the U.S.,credit card debt is a relatively common issue. Americans collectively owed about $1.08 trillion to credit card lenders as of the third quarter of 2023 — and the total will likely continue to grow, given today’s tough economic environment.
And, it’s not just overspending that’s causing the issue. Credit cards typically come with high interest rates and minimum payment structures that aren’t conducive to paying outstanding debt off quickly. So, it can be easy to find yourself overwhelmed bycredit card debt, even if you’re being careful about your spending.
That said, you don’t have to remain stuck in the debt cycle. There may be ways to get relief, like utilizingcredit card debt forgiveness. But what exactly is credit card debt forgiveness and how do you qualify to get your debt forgiven?
Find out how to get credit card debt relief now.
3 ways to qualify for credit card debt forgiveness
Credit card debt forgiveness is typically part of a debt relief solution known as debt settlement. The companies that provide this service often start by assessing your financial situation and creating a payment plan that makes it possible for you to affordably settle your debts in a reasonable amount of time.
Once a plan has been created, you’ll stop making payments to your creditors and send a monthly payment to the settlement company instead. The company holds these payments in a special purpose savings account until there is enough money to start settling your debts — at which point the company negotiates settlements with your creditors on your behalf.
If the debt settlement service settles your debt for less than you owe, the remainder of your credit card debt will be forgiven.
But how do you qualify for a debt settlement service? Here are a few ways you may qualify:
Compare your debt relief options today.
Significant credit card debt
Creditors will typically only agree to settlements that they believe are difficult, or impossible, to collect on. In turn, most debt settlement companies require customers to owe a minimum of $10,000 in credit card debt to qualify for their services.
However, you may be able to qualify for some services with less debt. For example, Freedom Debt Relief only requires its customers to have a minimum of $7,500 in total credit card debt.
A high debt-to-income ratio
A high debt-to-income ratio also helps paint that picture. After all, if you have significant debt relative to your income, it can be difficult for you to pay your debt off. In turn, it can be difficult for the creditor to collect.
Experience a financial hardship
An unexpected financial hardship may also help you qualify for credit card debt forgiveness. For example, if you recently lost your job, experienced a medical issue that led to a disability or had another event cause significant strain on your budget, your creditors may be more likely to accept a settlement offer.
When is credit card debt forgiveness a good idea?
“Debt settlement services may be a good idea if your total monthly payment for personal debts (usually high interest credit cards) exceed 50% of your gross monthly income,” says Brandon Robinson, president and founder of JBR Associates. “If you are unable to get the debt under control and paid off in a reasonable amount of time (say 24 to 36 months), then consider a debt settlement service.”
Debt settlement can save you a significant amount of stress, time and money, but it can also have a detrimental impact on your credit score. In turn, it’s generally only a good idea to take advantage of debt settlement services if you can’t otherwise see a feasible way to pay off your debt.
Another debt relief option to consider
If you’re able to make your minimum payments but are concerned about paying your debt off in a reasonable amount of time, it may benefit you to consider debt consolidation or debt management programs. These programs start with an assessment of your financial situation that gives experts the tools they need to negotiate better interest rates and terms on your behalf.
Once the experts complete negotiations, they’ll usually create an affordable payment plan for you. You then send one monthly payment to the debt relief company and the company makes payments to your lenders as agreed until your debt is paid in full.
The bottom line
Credit card debt can be overwhelming — but it can also be forgiven in some cases. If you have a significant amount of debt compared to your income, you may qualify for credit card debt forgiveness, so consider reaching out to a debt settlement company for help. Or, if you’re not struggling to make your payments but still don’t see a feasible way to pay your debt off in the next few years, consider enrolling in a debt consolidation program to speed up the payoff process instead.
Joshua Rodriguez is a personal finance and investing writer with a passion for his craft. When he’s not working, he enjoys time with his wife, two kids and two dogs.
