Many or all companies we feature compensate us. Compensation and editorial research influence how products appear on a page. Personal Finance Debt Relief Need Credit Card Debt Forgiveness? 4 Options Updated Aug 26, 2025 9-min read Written by Catherine Collins Written by Catherine Collins Expertise: Budgeting, mortgages, home equity, credit, debt, investing, personal loans, small business, entrepreneurship, student loans Catherine Collins is a personal finance writer and author with more than 10 years of experience writing for top personal finance publications. As a mother to boy/girl twins, she is passionate about helping women and children learn about money and entrepreneurship. Cat is also the co-host of the Five Year You podcast. Learn more about Catherine Collins If you need credit card debt forgiveness, it’s possible to reduce the amount you owe if you meet certain qualifications. Getting a portion of your credit card debt forgiven is more commonly called debt settlement or debt management. “Debt forgiveness” refers to government-sponsored debt reduction programs, like Public Service Loan Forgiveness for student loans. It’s unlikely you’ll get your entire credit card balance forgiven without declaring bankruptcy. However, you can get a portion of your debt forgiven by negotiating a debt settlement with your credit card company. Keep reading; we’ll explain who is eligible for a credit card debt settlement, what steps to take to get it, and some alternatives to consider. Table of Contents Does credit card debt forgiveness exist? Who qualifies? How much can you save with debt settlement? Options to settle credit card debt 1. Financial hardship 2. Debt management plan 3. Debt settlement company 4. Bankruptcy Alternatives FAQ What happens if I don’t get credit card debt forgiveness? What is the 7-year rule for credit card debt? Does credit card debt forgiveness exist? Not in the way you might be expecting. Credit card debt settlement exists, which is when you make an agreement with your lender to pay less than you owe on your credit card debt, and the lender marks it as paid in full. Complete credit card debt forgiveness, where a lender wipes out your entire balance, is unlikely unless you declare bankruptcy. Today, Americans have $1.21 trillion in outstanding credit card debt; however, there are no government-sponsored forgiveness programs for credit card debt like there are for student loans. If you want to pursue credit card debt settlement, you’ll need to negotiate with the credit card company yourself or hire a professional to do it for you. Who qualifies for credit card debt forgiveness? Each credit card company has its own procedures when it comes to settling debt with customers. Some won’t negotiate until you’re late on your payments. Others will negotiate if you aren’t late on payments but will ask you to document why you’re experiencing a financial hardship. Examples of hardship that you can document include job loss, a medical issue, a divorce, or a natural disaster. Even if you haven’t had a specific life event that’s made it difficult to make payments, it won’t hurt to call and ask your credit card company what your options are. Credit Card Debt – Hardship programs byu/Officerkc indebtfree A Reddit user in the thread above reported that one of their credit card companies offered assistance by temporarily cutting their interest rate by 17%. However, a different company rejected them from the hardship program. Whether you qualify for debt forgiveness will depend on your payment history and the credit card company’s policies. How much can you save with debt settlement? The amount you save with debt settlement will vary depending on how much you’re in debt, how late you are on your payment, and whether your credit card company is willing to negotiate. Some Reddit users report saving thousands of dollars with debt settlement. One negotiated a $10,000 settlement on $16,000 worth of debt: I reached settlement on credit card debt byu/Independent-Fill-707 inDebt Keep in mind that, according to the IRS, cancelled debt or forgiven debt is taxable income. You will receive a 1099-C, Cancellation of Debt form to file with your taxes. Speak with an accountant ahead of time to see whether this will affect the taxes you’ll owe. Options to settle credit card debt Here are four ways to settle your credit card debt. We’ve ordered them from least harmful to your credit to most harmful. Start by calling your credit card company and negotiating a settlement on your own by asking about financial hardship programs they offer. If you need help or someone to negotiate on your behalf, move on to the next option. 1. Financial hardship programs Financial hardship programs are offered by credit card companies to borrowers who are struggling to make payments. Programs vary by lender. Some lenders will offer to settle your balance for less than what you owe if you make a lump sum payment. Others offer a lower interest rate on your balance for a few months to help you catch up. Some restructure your debt to resemble a loan, where you make equal monthly payments until it’s paid off. For example, one Reddit user reported that his credit card company offered him a 0.99% interest rate and a set monthly payment for five years: Hardship programs? byu/qtChoco indiscover 2. Debt management plan (DMP) Several nonprofits, such as the National Foundation for Credit Counseling, offer debt management plans as a service. You work with a certified credit counselor to review your finances and create a plan to pay off your debt. The benefit of working with a counselor is that you get the support and accountability you need. With a DMP, you make a lump sum payment once a month to your debt management company. You must also close your credit card accounts during this process. Closing your accounts can hurt your credit score because it lowers your credit utilization, but unlike late payments, debt settlement, or bankruptcy, it will not result in negative marks on your credit report. It can also help you end the debt cycle by making it difficult to accrue new debt. 3. Debt settlement companies Another option is to work with a reputable debt settlement company. (National Debt Relief is our top choice.) This has benefits and drawbacks. One pro is that debt settlement companies negotiate with credit card companies on your behalf, so you don’t need to make phone calls to your lenders. Similar to a DMP, it also discourages the debt cycle by making it difficult to take on more debt while you’re enrolled in the program. The drawback is that you must stop making your payments for the debt settlement company to negotiate. As a result, your late payments can damage your credit score, which will make it hard for you to borrow money in the future. 4. Bankruptcy If you can’t consolidate your debt or settle it, filing for bankruptcy will eliminate your debt. However, filing for bankruptcy is a serious consideration; I only recommend it as a last resort. A bankruptcy stays on your credit report for seven to 10 years, which is a long time, especially if you have goals like purchasing a house someday. If you can pay off your credit card debt, settle, or enroll in a debt management plan, those are better options for your ability to borrow in the future than having a bankruptcy on your credit report. Debt Relief vs. Bankruptcy: Pros, Cons, and How to Choose the Right Path Alternatives to consider If you don’t think pursuing debt settlement or bankruptcy is right for you, other financing options can help you reduce the interest you’re paying, which can help you pay off your balances faster. These are debt consolidation options, rather than debt forgiveness or debt settlement options. 0% balance transfer card A 0% balance transfer credit card is a type of credit card that offers a promotional balance transfer for a set period of time. These cards typically charge a fee of 3% to 5% of your balance when you move it. After that, you’re guaranteed 0% interest for a specified term. It’s common for these cards to offer 12 to 18 months of 0% APR, but some, like the Citi® Diamond Preferred® Card, give up to 21 months of 0% interest. With this strategy, your full payment goes toward reducing your principal balance rather than interest. Just make sure to pay it off before the promotional period ends and the interest rate increases. Balance Transfer Card vs. Personal Loan Consolidation loan Another option is to take out a consolidation loan. Consolidation loans are personal loans you can use to pay off multiple credit cards at once. Personal loans have lower interest rates on average than credit cards, which can help you save money on interest costs. Another benefit of a consolidation loan is that it combines all your payments, making it easier to budget and manage your cash flow. However, not everyone will qualify for a consolidation loan; it requires a good credit score, a low debt-to-income ratio, and a stable job. It can also make it tempting to continue the debt cycle because your credit cards are still available. However, for those who do qualify, it’s a good strategy to reduce interest charges and improve your financial stress. Best Debt Consolidation Loans in 2025: Options Based on Credit Score, Plus How Much You Can Save Home equity products If you’re a homeowner with a significant amount of equity in your home, you may be eligible for a home equity loan or a home equity line of credit (HELOC). Like a consolidation loan, you’ll need proof of income, good credit, and the ability to repay the loan to qualify for either. The benefit is that home equity loans and HELOCs typically have lower interest rates than consolidation loans and credit cards. The drawback is that if you can’t make your payments, the lender can foreclose on your home because your home is the collateral for the loan. FAQ What happens if I don’t get credit card debt forgiveness? If you can’t pay and don’t work out an agreement, your account may be sent to collections. Creditors can also sue you for the balance, which could result in wage garnishment or a judgment against you. What is the 7-year rule for credit card debt? Most negative information, including late payments and charged-off credit card debt, falls off your credit report after seven years. However, the debt doesn’t disappear. You may still owe it unless it’s past your state’s statute of limitations.