How to Get Credit Card Debt Forgiveness

Credit card companies forgive large portions of credit card debt in return for payment plans. When a credit card company sells a delinquent account to a collection agency, it typically only earns a tiny portion of the total amount owed on the account. This creates a high incentive for the company to forgive large portions of debt for customers who are 60 days late or more on payments.

Instructions

1

Contact your credit card company if you are 60 days late or more on your payments. Credit card companies are not likely to reduce the balance of your account or freeze your interest rates unless you have proven yourself incapable or unwilling to make minimum payments over an extended period of time. In many cases, banks will send out debt forgiveness agreements to customers already delinquent on payments.

2

Ask a customer service representative at your credit card company what the conditions of the debt forgiveness will be. In most cases, they will require that you recommit to a payment plan to reduce the balance of your card. Your interest rate may be frozen and the size of the balance may be reduced. You most likely won't be able to use the credit card again, but the company will give you a boost in your efforts to get out of credit card debt.

3

Request that the debt forgiveness agreement be mailed to you in writing. Don't start sending any payments until you have agreed to and signed a contract from your company. Send appropriate payments once you do so.

4

Report the forgiven debt as income when you file your taxes for the year that you received it. Unfortunately, the Internal Revenue Service counts all forgiven debt as additional income, so in effect you will still need to pay some of the amount of the debt. The lender will send you a 1099-C form notifying you of the cancellation of debt to simplify the process.