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Is Credit Card Debt Forgiveness Right for You?


American consumers have a total of more than a trillion dollars in credit card debt, and a lot of it is yours.  Credit card debt is a big part of the reason that most households are living paycheck to paycheck, even the ones with an annual income of more than $100,000.  Debt payments, including minimum payments on credit cards, are taking up a substantial portion of consumers’ paychecks.  Therefore, it can come as a relief that there is even such a thing as credit card debt forgiveness.  Is it really possible to make some of your credit card debt disappear just by asking nicely?  Even when credit card debt forgiveness is an option, it can have negative consequences, so before you choose credit card debt forgiveness, you should make sure that the benefits outweigh the risks.  To find out the things that advertisers of financial products don’t tell you about debt relief options, contact a Plantation debt lawyer.

How Does Credit Card Debt Forgiveness Work?

“Credit card debt forgiveness” sounds too good to be true; debt forgiveness implies that the lender acknowledges that they were charging the borrower an unaffordable amount in the first place.  What advertisers call credit card debt forgiveness is actually credit card debt settlement, like you would do with a creditor as a last-ditch effort for avoiding a bankruptcy filing or like collection agencies often try to pressure you to do.  In other words, you agree to pay a portion of your remaining balance in installments, and the credit card company agrees to waive the remaining balance.

Debt settlement companies sometimes offer to negotiate with the credit card company to settle your debt, but it is also possible for you to negotiate directly with the lender.  You should think twice before you do this, though.  Settling a debt for less than the face value amount can negatively affect your credit score.  Even worse, if the amount that the credit card company agrees to forgive is more than $600, the IRS will count the debt relief as taxable income.

Alternatives to Credit Card Debt Forgiveness

The credit score consequences and tax burden might be worth it if you are struggling to keep up with your minimum payments, such that credit card debt settlement is the only way you can avoid defaulting on your credit card debt or filing for bankruptcy.  If your situation is not quite so dire, though, then you should consider other options.  For example, a balance transfer might save you money on interest, as could a debt consolidation loan.  If you are able to make anything more than the minimum payments, even if it is just a few dollars a month, the best option might just be persistence in paying down your debts.

Work With a Debt Lawyer About Coping With Credit Debt

A South Florida debt lawyer can help you decide whether settling your credit card debt is the best option, or whether you should choose a different option such as debt consolidation or a balance transfer.  Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.



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