How to Write Off Your Credit Card Debts

You've probably seen the commercials on TV, companies promising to write off all of your credit card debt--or a fee, of course. The first thing you should know is that it's a fantasy. The only way to write off all of your credit card debt is to become destitute. If you have any money at all, the credit card company will want it. What you can do is negotiate with the card issuer to write off part of your debt, in return for agreeing to pay the rest.

Instructions

1

Contact the credit card company as soon as you realize that you can't keep up with the bills. The sooner you let them know, the better. Most credit card companies are willing to negotiate. It's preferable to you defaulting on the entire debt.

2

Ask for a lower interest rate. A few percentage points can save you thousands of dollars in the long run.

3

Explain to the card company that you cannot possibly pay off the entire debt. You will need to show some proof of this. If you've lost your job or have been ill, tell them.

4

Come up with a proposal. Tell the credit card issuer how much you can pay and how often. Ask if they would consider reducing your balance in exchange for a new payment agreement that you can afford. This will only work if you genuinely cannot pay the full amount. Credit card companies will not write off debt that they can still collect.

5

Stick to the new payment plan. Writing off a part of your credit card debt will hurt your credit score. The only way to build it back up is to keep up with subsequent payments.

6

Pay income tax on the amount you wrote off. As of 2010, the IRS considers written-off debt the same as income. You will be responsible for the taxes.