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Credit Card Debt Forgiveness Act Explained

Patrick Austin, J.D. | January 10, 2024

Patrick Austin
Attorney from George Mason
Patrick Austin, JD

Patrick Austin is a licensed attorney with a background in data privacy and information security law. Patrick received his law degree at George Mason University's Antonin Scalia Law School, where he served as the Editor-in-Chief for the National Security Law Journal.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: There is no federal credit credit card debt forgiveness program or law that will wipe the proverbial slate clean on those outstanding credit card balances. In other words, a Credit Card Debt Forgiveness Act does not exist in the US. Nevertheless, there are strategies and techniques you can use to potentially reduce the total amount of credit card debt you owe. SoloSettle can help you settle your credit card debt for good.

Credit card debt forgiveness is when a credit card company does not make you repay all of your outstanding balance. It’s possible under certain conditions, but you always have to give something up to get it.

The idea behind credit card debt forgiveness is that if creditors can’t get the full amount owed in a reasonable timeframe, they may decide that something is better than nothing and forgive the rest. But debt collectors will only resort to forgiveness in extreme situations, usually after several missed minimum payments. So it’s more about your creditor making the best of an unprofitable situation.

The United States does not have a Credit Card Debt Forgiveness Act to regulate debt forgiveness granted by creditors and debt collectors. Regardless, there are many tricks you can employ to reduce your overall debt from credit cards.

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Is credit card debt forgiveness real?

Yes, credit card debt forgiveness is real, but not in the sense that your entire debt will be wiped out or forgiven. Typically, credit card debt forgiveness entails working with your creditor to resolve an outstanding.

Credit card companies may forgive your debt by offering a financial hardship program where they lower your monthly payments and interest rates and provide temporary relief from late fees until your financial situation has improved.

If your creditor doesn’t offer a financial hardship program, you still have options. Keep reading to learn how to get credit card debt forgiven.

Use these strategies and techniques to find credit card debt relief

Credit card debt can feel overwhelming, but there are ways to find relief. Please be advised that these strategies and techniques are not a cure-all and will not be able to get all of your credit card debt wiped away (reality check: no method, strategy or federal law currently exists to forgive and forget all credit card debt).

Nevertheless, it may be possible to get a percentage of your credit card debt reduced through the following strategies and techniques:

  • Negotiate with your creditors to reach a debt settlement agreement.
  • Consolidate your credit card debt.
  • Wait for the applicable statute of limitations on your credit card debt to expire.

Below, we’ll break down each of these strategies in detail.

Negotiate a debt settlement agreement with your creditor(s)

A worthwhile credit card debt reduction strategy is attempting to negotiate a “debt settlement” with your creditor(s), which would be your credit card company, or companies. A credit card debt settlement sets the amount you are able to repay (which is typically either paid via a lump-sum or over the course of a specified period of time). The remaining balance is wiped away.

Here is a general overview of how you could achieve a credit card debt settlement:

  • Be prepared. Do the necessary prep work, research and calculations before contacting any of your creditors. Why? Because you need to figure out how much you currently owe and what monthly payment you can reasonably afford post-settlement.

  • Contact your creditor(s) to discuss your situation. When you contact your credit company, or companies, make sure to calmly and professionally present the relevant facts and provide an explanation as to why you are unable to afford making your current monthly payments.

  • Engage in credit card debt settlement negotiations. A good way to initiate credit card debt settlement negotiations is by proposing either a lump-sum payment or a modified monthly payment. You can then engage in a back-and-forth with your creditor(s) to, hopefully, reach an amicable settlement.

  • Make sure to get the credit card debt settlement agreement in writing. If you are able to reach a credit card debt settlement agreement, make sure to get a copy of the agreement in writing. Also,make sure you possess a clear understanding of the terms and are comfortable with the agreement’s provisions.

SoloSettle makes the debt settlement process easy. As a tech-based approach to debt settlement, SoloSettle’s software sends and receives settlement offers until an agreement is reached between the debtor and creditor.

Check out the following video to learn more about how SoloSettle can help you settle your credit card debt—once and for all.

Consolidate your credit card debt

Debt consolidation will not forgive or wipe away the balance of credit card debt you currently owe. Nevertheless, credit card debt consolidation is a generally effective technique for most people to help reduce monthly payment obligations and can help avoid accruing additional interest, fees and potential penalties.

You can consolidate your credit card debt through multiple avenues, including:

  • Transfer multiple balances to a single credit card.
  • Take out a personal loan and use the funds to pay off your credit cards.
  • Take out a home equity loan and use the funds to pay off your credit cards.

Wait for the statute of limitations on your credit card debt to run out

Fair warning: waiting until the statute of limitations expires is not the best credit card debt reduction strategy and really should not be considered unless and until you have exhausted all other options. Nevertheless, it is a strategy that exists. Basically, to achieve credit card debt reduction via the statute of limitations, you will need to be extremely patient, disciplined, and comfortable with ignoring the debt entirely.

Patience is necessary because most states afford creditors multiple years to pursue a recovery on an outstanding debt. Oh yeah, and in some states, if you even acknowledge the credit card debt exists, the clock on the statute of limitations for that debt can restart giving the creditor even more time to come after you for repayment.

If you are patient, disciplined, and devoid of any fear or anxiety with being sued for a delinquent debt and receiving multiple phone calls and letters from debt collectors, there is an eventual point where the statute of limitations expires. After that time, the creditor can still take you to court, but you will have the ability to file a motion to get the lawsuit dismissed due to the expiration of the applicable statute of limitations.

Use the Statute of Limitations Calculator below to determine your state's statute of limitations on credit card debt:

Statute of Limitations Calculator

Select your state.

Choose the debt type.

Select the last day you made a payment.

The Satute of Limitations

This calculator is for educational purposes only.

Will credit card companies forgive debt?

Yes and no.

Credit card companies, as a general rule, are not in the business of forgiving debt without conditions. They are for-profit organizations and have an interest in collecting the money that they are owed.

However, some credit card issuers may be more willing to work with customers facing financial hardship or difficulties than others. Their willingness to negotiate or offer debt relief can vary depending on the specific circumstances and policies of the credit card company.

If you're experiencing financial hardship and need assistance with your credit card debt, here are some credit card issuers that have been known to be more flexible in working with customers, offering hardship programs, repayment plans, and debt settlement options:

Your options for credit card debt relief depend on your individual circumstances, including the severity of your financial hardship and your history with your credit card company. If you're facing financial problems, it may be in your interest to contact your credit card issuer directly to discuss your situation and explore available options for assistance.

Additionally, you may also consider reaching out to nonprofit credit counseling agencies, as they can often negotiate with credit card companies on your behalf and help you establish more manageable repayment plans.

Big Takeaways

  • There is no state or federal law directly authorizing the forgiveness of credit card debt (it’s a great idea, though).
  • Some credit card companies offer debt forgiveness through financial hardship programs by lowering monthly payments and interest rates and offering temporary relief from late fees.
  • There are multiple strategies available when considering how to reduce or consolidate your total credit card debt.
  • Negotiating a credit card debt settlement and/or consolidating your debt are proven debt reduction strategies that can help net an overall reduction in the amount of credit card debt you will need to pay down.
  • SoloSettle, powered by Solosuit, can help you settle your credit card debt and move on with your life.

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

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