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Credit Card Debt Forgiveness Act Explained

Patrick Austin, J.D. | April 12, 2023

Summary: In contrast to student loan debt, 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. Keep reading to learn more.

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Use these strategies and techniques to reduce your credit card debt

There are some notable strategies and techniques to consider which are proven to help reduce the total amount of credit card debt you may ultimately have to pay down. 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.

Big Takeaways

  • There is no state or federal law directly authorizing the forgiveness of credit card debt (it’s a great idea, though).
  • 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.

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