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While credit card interest rates are on a record high of about 23% On average, it’s no surprise that many people struggle to keep up with their monthly credit card payments. After all, the average American wears approx $8,000 in credit card debt And since interest charges are calculated at today’s high interest rates, it’s surprisingly easy to get stuck in them a cycle of credit card debt with no end in sight.
However, the current high credit card rates are not the only problem. There are also other economic challenges that play a role, such as inflated house prices and the food prices that remain years of high inflation. With essentials taking up even more space in people’s budgets, many people have found themselves strapped for cash lately. That, in turn, has led to more people turning to these types of short-term loans to make ends meet an increase in credit card use.
But even if you owe more than average (let’s say $10,000 or more), there are options, such as cancellation of credit card debtthat can help you reduce your credit card debt. With debt forgiveness, the goal is to reach an agreement with your card issuers to reduce the overall balance in exchange for a lump sum amount in the account. But how much of that $10,000 in credit card debt could be forgiven?
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How much of a $10,000 credit card debt will a forgiveness plan cover?
Forgiveness of credit card debt will not erase your entire debtat least not in most cases. So if you’re hoping to walk away completely debt-free, you may need to consider more drastic measures, such as… file for bankruptcyalthough this has long-lasting consequences. On the other hand, debt forgiveness is a less damaging option for reducing your debt burden.
Typically, credit card debt forgiveness programs result in settlements reduce your outstanding balance by 30% to 50%. This means that if you have $10,000 in credit card debt, you can pay back an average of $5,000 to $7,000. This is a significant reduction that could provide some breathing room in your budget. But it’s important to know that eligibility for debt forgiveness is not automatic.
Nasty qualify for debt forgivenessMost companies require you to have at least $7,500 in credit card debt. That means if you’re dealing with $10,000, you’re probably already eligible, but eligibility doesn’t guarantee approval. You will also have to prove that you are faced with financial problems – such as a job loss, a serious medical problem or other significant financial setback – that makes it difficult so you can keep track of your credit card payments.
So if you’ve been making the minimum payments on your credit card on time each month, you may not be seen as an ideal candidate for debt forgiveness, even though the minimum payments will barely reduce your balance. Lenders tend to prioritize working with borrowers who are behind on their paymentsas this indicates greater financial problems.
That means missing a few payments can increase your chances of qualifying for debt forgiveness, even if there are clear (and serious) financial consequences of doing this. However, if you meet the lender’s qualifications, you can significantly reduce your balance and potentially get a settlement that lowers your credit card debt to a more manageable level.
Compare your options for debt relief here.
Other debt relief options to consider
While credit card debt forgiveness can be a useful tool, it is not the only debt relief option available to you. If you are not a good candidate for debt forgiveness or would like to explore other ways to reduce your credit card balance, consider alternatives such as:
- Debt Consolidation Loans: These loans can help you combine multiple debts into one loan with a lower interest rate, making your debt cheaper and speeding up the repayment process.
- Debt management programs: Debt management programs helping you create a structured repayment plan that can reduce interest rates and fees, helping you pay off debt faster.
- Balance transfer credit cards: These cards offer a low or 0% introductory interest rate, allowing you to do just that transfer your balance and save on interest costs for a set period of time (typically 12 to 21 months).
The bottom line
For those struggling with $10,000 or more in credit card debt, debt forgiveness can be a helpful way to reduce the amount owed, although it likely won’t erase the entire balance. But while the right debt forgiveness program can help reduce your credit card debt, it’s still essential to explore all available options, including debt consolidation, debt management, and balance transfers, to determine which makes the most sense for you. And depending on the specifics of your unique situation, seeking advice can also help a specialist in debt restructuring to find the best way forward.
