Credit card debt is a common financial issue many Americans experience. This debt can quickly accumulate due to high-interest rates making it difficult to pay off the balance. As interest compounds, the total debt grows, creating a cycle that can be hard to break. Many people rely on credit cards for convenience or to cover expenses, but without careful management, the debt can spiral out of control. However, if you find yourself struggling with extreme credit card debt, you may qualify for credit card debt forgiveness.
Credit card debt is a significant concern for many Americans
As of the second quarter of 2024, the total credit card debt in the United States is $1.142 trillion. This is the highest amount of debt ever recorded by the Federal Reserve Bank of New York and nearly a 6% increase from last year. With cost-of-living reaching an all time high this year, many Americans are having to resort to credit cards to cover basic living expenses despite not having sustainable access to paying of the amount they are borrowing.
In 2023, the average credit card debt owed per household was $8,599. Responsible credit card use involves paying off the balance you owe at the end of each month. While carrying debt can be a strategic tool for wealth building in terms of real estate and certain investment opportunities, this requires discipline and informed knowledge on how to use debt as leveraging power. The average American buying on credit is not using credit in this way, and responsible use of paying off debt at the end of each month is a much more sustainable approach towards credit.
No government programs forgive credit card debt
It is important to note that no government programs or funding exist to assist people with credit card debt. However, if you have racked up a significant amount of credit card debt, there are steps you can take to having some or all of this debt forgiven by creditors you have borrowed money from. Further, nearly anyone could receive some type of credit card debt forgiveness by creditors. Creditors often conclude that it is more cost-effective to forgive a portion of the debt rather than pursue full repayment, especially if the debtor is unable to pay the full amount.
Debt settlement programs are one such option you can pursue for getting your credit card debt forgiven. These programs are services or strategies designed to help individuals reduce or eliminate unsecured debt by negotiating directly with creditors to accept less than the full amount owed. These programs play a crucial role in helping individuals settle credit card debt which may seem overwhelmingly impossible to pay off.
The debtor typically enrolls in a debt settlement program through a third-party company or organization, often with a fee-based structure. The individual will stop making regular payments to their creditors and instead deposit money into a dedicated account managed by the settlement company. This account accumulates funds over time, which will eventually be used to settle the debts.
Debtors can file for bankruptcy
If your credit card debt is impossible to pay off, you may have to file for bankruptcy. This is a legal process that provides full relief from debt, but it also involves significant financial consequences and long-term implications. Your credit score will be severely impacted and will often prevent you from purchasing anything on credit for the next seven to ten years. This includes applying for home or car loans. However, this is often the only choice individuals have to pay off their debt and a slashed credit score is often more worthwhile than being thousands of dollars in debt.
