Experts: Can I Receive Full Credit Card Debt Forgiveness?

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If you have credit card debt, chances are you’ve probably wondered if it’s possible to receive some form of debt forgiveness. You might have heard rumors some credit card issuers can extend full credit card debt forgiveness and wonder if this is a legitimate option available to you.

Can I receive full credit card debt forgiveness?

Is Full Credit Card Debt Forgiveness Likely?

Generally, credit card debt forgiveness is not common. Dean Kaplan, president of The Kaplan Group, said occasionally credit card issuers do forgive all of your debt on a credit card. The caveat is the card issuer requires proof of the financial hardship that makes it so you can’t pay. 

It is also possible the credit card company may offer to settle for a lower amount paid than what you owe. However, Kendall Meade, CFP at SoFi, said because you are not paying the full amount this will likely be a negative hit to your credit. 

Tips for Tackling Credit Card Debt

Since it is unlikely you will be unable to receive full credit card debt forgiveness, try some of these strategies to help pay down and pay off your balance. 

Create a Budget

One of the first steps to paying off credit card debt is creating a budget. Those who stick to their budgets will be able to see how much they have available each month to pay off debt. Cutting back on discretionary spending and working a side hustle for extra income can also help pay off debt fast.

Use Good Credit Card Payment Etiquette

“Always make the minimum payment on time so you don’t get charged additional fees and damage your credit score,” Kaplan recommends. “Scheduling automatic payments is a good way to make this easier.”

You might also explore transferring balances to cards with lower interest rates. Doing so, Kaplan said, means more of your money goes towards paying down the principal.

Consider Debt Consolidation

Credit card holders able to get a lower interest rate may consider debt consolidation. This can reduce the total amount you owe and help you pay off credit cards faster. 

“It can also be helpful since credit cards have variable rates, hence the interest rate on your card may increase if interest rates increase. By refinancing this debt to a fixed rate you can lock in your rate,” said Meade. 

As a pro tip, Meade recommends anyone who decides to do debt consolidation stop using their credit cards until their debt is paid in full. 

“I have seen many people consolidate their debts into a loan but then continue to run the credit cards back up,” said Meade. “Now they have double the payments and may not have the option to consolidate again making it much harder for them to get out of debt.”

Use the Fireball Method

The fireball method is Meade’s favorite method for paying down debt. It combines two of the most common debt payment methods — debt snowball and debt avalanche. 

To implement this method, Meade said to first separate your debt by looking at the interest rates. Ask yourself if the interest rate is lower or higher than 7%. Credit card holders will pay the minimum on all their card balances and put any extra money they have towards the bad debt with the lowest balance first. After this is paid off, Meade said you’ll add the amount you were paying to the bad debt with the next lowest balance. Keep repeating this process until all of the bad debt is paid off.

Similar to debt consolidation, Meade said not to use credit cards while in the debt payoff phase. Doing so gives cardholders the chance to keep an eye on their spending and to see their progress in action.

Negotiate a Payment Plan

It is possible to negotiate a long-term payment plan or a reduction in your credit card interest rate or fees if you work alongside a reputable debt counselor.

Kaplan recommends The National Foundation for Credit Counseling (NFCC) if you need a referral to a local reputable counselor. 

“The first counseling session is usually free and the average monthly fee can’t exceed $79 and is often $40 or less. Avoid any counselor who wants to charge a large fee upfront – it is probably a scam,” said Kaplan.

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