In order to get credit card debt forgiveness, you will need to contact the credit card company with whom the debt was accumulated. Once you contact the credit card company, you will need to negotiate with the credit card company about the debt. In most cases, a lump sum cash payment will need to be made to obtain credit card debt forgiveness.
Credit card debt forgiveness is sometimes offered by credit card companies as a way to collect outstanding debts. In most cases, this is only offered if the customer has been avoiding payment for an extended period of time. This is also sometimes referred to as debt settlement.
The first step in the process of obtaining credit card debt forgiveness is to contact the credit card company. In many cases, the credit card company will attempt to contact you to collect the debt. The credit card company may be working with a debt collection agency to collect the debt as well. Call the company and speak to a representative about your account.
The next step in the process is to negotiate a settlement. In many cases, the credit card company will take a fraction of the original debt. Large debts can often be settled for less than half of what was owed.
In order to get your offer accepted, the credit card company will usually want a cash payment. The credit card company will take a lump sum payment in return for eliminating the debt. Once the cash payment is made, the rest of the debt will be forgiven.
When credit card debt forgiveness is issued, the amount of money that is forgiven is viewed as income by the IRS. This amount of money is taxable according to IRS laws. This means that even though the debt was forgiven, you will still have to come up with enough money to pay the taxes on the amount that was forgiven. The rate at which you pay taxes on this amount will be determined by your marginal tax rate for the year.
Another potential drawback of this process is that it can significantly hurt your credit. When a credit card company allows part of your debt to be forgiven, it will go on your credit file as an account that was settled. Other creditors who look at your credit file in the future will be less willing to offer you credit because of this.