Credit Card Debt Forgiveness Programs

Credit card debt increases as customers rely on credit to get by.

With consumer credit card debt increasing into the billions in the 21st century, more and more consumers are finding themselves strapped under the weight of debt. Coupled with tough economic times, job losses and increasing interest rates, many consumers are finding it difficult to keep up on their payments. A debt forgiveness program may help some consumers catch up on their monthly payments and reduce the amount of debt they owe. Several options exist for debt forgiveness through creditors and settlement agencies.


A settlement is a type of debt forgiveness program where you settle the credit card debt for a portion of the amount you actually owe. ABC News reports that some creditors have been known to settle a debt for as little as 30 percent of the total owed, but typically consumers must be at least 90 days behind in their payments. In most cases, a credit card company can report all unpaid debts as a write-off on their corporate tax returns. When you negotiate a settlement, your creditor agrees to accept a lump sum payment and write off the remaining portion of the debt. The creditor receives a cash payment, and you get to settle your credit account.

Debt Management

A debt management program can be administered through a dedicated department within the credit card company, but most consumers seek assistance through an independent debt management organization. According to MarketWire, you work with a professional arbitrator or debt management specialist to structure an affordable payment plan for your debt. The debt management specialist works on your behalf to get the credit card company to forgive a portion of the debt in return for making regularly scheduled payments. Typically, a debt management counselor works with you to combine all of your credit card accounts into one affordable monthly payment. You make the monthly payments to the debt management company, who then forwards payments to your creditors.

Workout Plan

A workout plan allows you to work with your creditor to reduce the amount of debt you owe. Although the creditor may not reduce your principle balance as part of a workout plan, you can request debt forgiveness in the form of interest and other fees. In return for making regular, scheduled payments which may be drawn automatically from your bank account, the lender agrees to suspend any additional interest, penalties and late charges on your account. Your account may be placed on hold while you make payments, but most lenders will restore charging privileges following successful completion of the payment workout plan.