Credit card debt forgiveness is a perfect example of this impulse: Although it’s not your fault that you find yourself in debt, you’ll have to take responsibility for getting yourself out of your predicament.
This might not be as hard as it sounds. There are plenty of ways to get out of debt without seeking credit card forgiveness through bankruptcy. Since the ramifications of a bankruptcy declaration are particularly severe, it’s best to take this step only as a last resort.
Although there are several different forms of debt relief, there are only two types of debt forgiveness: bankruptcy and debt settlement. Both methods of debt reduction are capable of reducing the total amount that you owe your creditors. As you search for ways to reduce your debts and get your financial future back on track, you’ll want to learn more about the process of debt forgiveness.
How Credit Card Debt Forgiveness Works
As its name implies, debt forgiveness can reduce the total interest-generating amount that you owe to your creditors. Whether at the behest of a bankruptcy judge or a debt-settlement specialist, your creditors may choose to slash or even eliminate the principal balances on your debts.
In bankruptcy, many unsecured debts are completely forgiven. During the bankruptcy process, secured creditors like mortgage and auto lenders take precedence over unsecured lenders like credit card issuers and business lenders. When you file for bankruptcy, each of your secured debts will be satisfied immediately.
If you have a mortgage that you can’t afford, your mortgage lender will initiate foreclosure proceedings on your house. If you can’t afford to keep making your car payments, your auto lender may repossess your car.
Once all of your secured debts have been satisfied, you’ll use your leftover funds and assets to pay off your unsecured creditors. Any unsecured debts that you’re unable to pay off will be forgiven. You won’t be obligated to repay them in any fashion.
In this manner, the bankruptcy process may result in thousands of dollars’ worth of credit card debt forgiveness. Of course, the consequences of debt forgiveness through bankruptcy may make the process unattractive.
National Debt Relief may be able to help you secure credit card debt forgiveness through the “gentler” process of debt settlement. In fact, the debt settlement professionals at National Debt Relief may be able to reduce the principal balances on your unsecured debts by an impressive amount. These debt relief specialists have been known to negotiate debt reductions with credit card companies, hospitals, retail-store card issuers and other unsecured-debt purveyors.
Unlike certain other forms of debt relief, debt settlement can dramatically improve your financial profile by providing you with real, lasting debt forgiveness. If National Debt Relief can reduce your $20,000 debt load by $8,000, you’ll be able to claim that 40 percent of your total debt burden has been forgiven. The banks and credit card companies that have written off these debts will agree with you.
Before you struggle to pay another massive credit card bill, call the friendly debt relief specialists at National Debt Relief for a free debt consultation. They’re waiting to take your call at 800-300-9550.
One last thing about credit card debt forgiveness is that any money forgiven by your creditors over $600 will count as taxable income. So in our hypothetical example above of $20,000 in credit card debt and $8000 forgiven by your creditors, you may have to pay taxes on that $8000 because it counts as income. However, there are situations where you may not have to pay any taxes on any forgiven debt. One of these situations is when you are insolvent at the time of the settlements. If you have more liabilities than assets when you settle with your creditors then you are considered insolvent and do not have to pay taxes.
You will need to consult a tax professional to discuss any credit card debt forgiveness you may get when you work with a professional debt relief company like National Debt Relief.