3 credit card debt forgiveness strategies to use this September

With interest rates elevated and inflation continuing to have a grip on household budgets, an increasing number of people are struggling to get rid of their mounting credit card debt. Recent data shows that the collective credit card debt nationwide is $1.14 trillion — an all-time high — and that a growing number of cardholders are maxed out. The number of delinquent credit card accounts has also been rising, indicating that more and more cardholders are struggling to stay on top of what they owe. 

When this particular type of financial strain arises, the traditional approaches to debt management may fall short — especially for those with significant amounts of credit card debt. In these cases, it can make more sense to turn your attention to aggressive debt relief strategies, including credit card debt forgiveness, also referred to as debt settlement. With this option, the goal is to have your creditors accept less than the full amount that's owed on your account.

But while the concept of debt forgiveness may seem straightforward, the reality is more nuanced. There are multiple approaches to settling credit card debt and understanding these various strategies is crucial for anyone considering this route. 

Learn more about debt forgiveness and your other debt relief options now.

3 credit card debt forgiveness strategies to use this September

Using these credit card debt forgiveness strategies could provide you with relief from high-rate card debt this September:

DIY debt forgiveness

For those with a knack for negotiation and a willingness to put in the effort, a do-it-yourself (DIY) approach to debt settlement can be smart. This method involves directly contacting your creditors to negotiate a lump-sum payment for less than the full amount owed. 

To begin, assess your financial situation and determine how much you can realistically offer as a settlement. Then, contact your creditors, explain your financial hardship and propose a settlement amount. If the creditor agrees, it's crucial to get the settlement offer in writing before making any payments. Once you've paid the agreed amount, ensure you receive documentation that the debt is settled in full.

The DIY approach offers several advantages. For starters, you maintain control over the negotiation process while avoiding fees to third-party debt relief companies. There's also potential for significant savings on your debt. However, this method isn't without its challenges. It requires strong negotiation skills and persistence, which can be time-consuming. Settling your debts for less than the full amount owed may also negatively impact your credit score.

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Debt forgiveness via a debt relief company

If you would prefer not to negotiate on your own, or would simply prefer to have an expert in control of the process, enrolling in a debt forgiveness program through a debt relief company could make more sense. With this option, the debt relief company acts as an intermediary between you and your creditors, handling the negotiations (and most other parts of the process). 

When you enroll in a program, you're typically asked to stop paying your creditors and instead make monthly payments to the debt relief company, with the funds deposited into a dedicated account. Once sufficient funds accumulate in the account, the company negotiates with creditors on your behalf. Settlements are then paid from that account.

Working with a debt settlement company can be advantageous for a few reasons, not the least of which is that professional negotiators can often secure better settlements. Doing so will also reduce your direct contact with creditors. These programs provide a structured plan for debt resolution, as well. 

However, there are drawbacks to consider. The fees charged by debt relief companies can be high, typically 15-25% of the total enrolled debt. Your credit score will also take a hit, at least initially, and there's a risk of encountering scams or unethical practices, so it's important to do your homework.

Bankruptcy

While bankruptcy should generally be considered a last resort, this option can provide a fresh start for those overwhelmed by unsecured debts, including credit card debt. The big benefit of filing for bankruptcy is that it can provide a clean slate by discharging unsecured debts and includes an automatic stay that stops creditor collection actions. It can also be faster than many other debt relief options. 

However, filing for bankruptcy has severe long-term impacts on your credit, as it typically remains on your credit reports for seven to 10 years. Certain types of bankruptcy may also require that you liquidate assets. And not all debts are dischargeable in bankruptcy.

The bottom line

If you need to have your credit card debt forgiven this September, there are a few different options to consider, from DIY debt relief to debt relief programs and bankruptcy. As you consider these credit card debt forgiveness strategies, though, it's crucial to weigh the potential benefits against the risks and long-term consequences. Each option comes with its own set of trade-offs, and what works best will depend on your individual financial situation, the amount of debt you're carrying and your long-term financial goals.