A lot of people are finding things more expensive these days - groceries are up by 25%, housing costs have gone up over 20%, and getting around costs 27% more than it did in 2019.
Because of these high prices, many are using their credit cards more often and ending up in debt, especially now that borrowing money is getting more expensive.
If you’re feeling stuck with too much credit card debt, you might wonder if you can get some of it forgiven, which means you won’t have to pay back the full amount.
Here’s a simple look at how this process works.
Getting Some Debt Forgiven
To reduce what you owe, you can talk to your credit card company to see if they'll let you pay less than what you owe. While you can try to do this on your own, there are companies that specialize in this kind of negotiation and might get better results.
It’s rare for a company to let you off the hook for the whole amount, but you might not have to pay back half of what you owe if you’re lucky. Creditors might agree if:
- You really can’t afford to pay back what you owe.
- The debt is old. Creditors sometimes settle for less rather than getting nothing at all.
- Specific policies. Some credit card companies are more willing to settle than others.
- Your negotiation skills. Being good at negotiating can help.
Bankruptcy: The Last Resort
If there's absolutely no way you can pay back your debt, filing for bankruptcy might be another way out. There are two main types for individual people:
Chapter 7 can get rid of all your credit card debt, but you need to make less money than the average person in your state, and you might have to sell some things you own to pay off debt.
Chapter 13 suits those who make more money. You pay back some of your debts over three to five years, and after that, you might not have to pay back the rest.
In Short
Getting all your credit card debt wiped clean doesn’t happen often, but you might be able to pay less than you owe. If there’s no way out, bankruptcy could erase your debt, but it's a big step with lasting effects. No matter the route, there are ways to deal with too much credit card debt.
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