Have $20,000 in credit card debt? Here's how much a forgiveness plan could cover.
If you're suffering from unmanageable credit card debt you're not alone. Right now, the average American has around $8,000 in credit card debt. And many are coping with high credit card interest rates in addition to that debt. With the average credit card rate near 23% currently, the interest alone can easily make paying back what you owe difficult, if not impossible. That's partially why credit card debt recently hit a record $1.4 trillion nationwide.
Fortunately, borrowers have multiple debt relief options available. They just need to know where to look to determine which can provide the most help right now. For many, that involves turning to credit card debt forgiveness via a debt relief company. For qualified borrowers, credit card forgiveness can be the difference between regaining your financial freedom and staying mired in debt. Since most servicers require a minimum of $7,500 in debt, this type of debt relief is often best reserved for those who owe that amount or more. For borrowers with $20,000 in debt, it can provide substantial assistance. Before getting started, however, it's critical to know how much a forgiveness plan could cover. That's what we'll break down below.
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How much of a $20,000 credit card debt will a forgiveness plan cover?
If you were hoping for a credit card forgiveness program to cover your full, outstanding $20,000 debt, you'd be mistaken. Credit card debt forgiveness doesn't simply wipe the slate clean. If you want that you'll need to turn to bankruptcy and the inevitable credit score damage that will result from it. But if you want to tackle your debt and get at least some portion of it erased, a forgiveness plan can help. Most providers will cover between 30% to 50% of your outstanding balance, assuming you meet the qualifications for that assistance.
With a $20,000 balance, you can potentially settle for an amount between $6,000 and $10,000. Your balance won't just drop to zero. And it will take time to get this debt forgiven (two to four years on average). But if you get started now and closely follow the steps outlined by your debt relief provider, you can make a significant dent in what you owe.
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How to qualify for credit card debt forgiveness
Simply owing a five-figure credit card debt sum won't automatically qualify you for forgiveness. You'll also need to clearly demonstrate a financial hardship that's preventing you from making the payments as agreed upon (and you'll need to have documentation to support this position). It may seem contradictory, but it also helps if you've been behind on payments already. If you haven't been and are still paying on time each month (even with minimum payments), that shows lenders that you can repay what you owe, albeit on a slower schedule. There may be other qualifications specific to the debt forgiveness servicer in question, so be sure to clearly understand each one's eligibility requirements before signing up for their program.
The bottom line
A $20,000 credit card debt balance can be greatly reduced with the use of a forgiveness program but it won't be eliminated in its entirety. Still, even a 30% to 50% reduction can help, particularly when dealing with a five-figure debt in today's high interest rate climate. Just understand that while not as damaging as bankruptcy, a forgiveness plan could hurt your credit score. But if the alternative is to let this debt pile higher, that may be worth it for some borrowers.
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