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Lump-sum settlement For example, you might owe $4,000 between charges, interest and fees on your credit card, but you ask the bank to accept $2,500 (your original credit limit) to settle the account in full. If the card issuer accepts, it will forgive the remaining balance.
You enroll through a credit counseling agency. The agency will work with your creditors to reduce or eliminate interest and work out a payment schedule. Qualifying Texans can get out of debt in 36-60 payments, on average. Another option for Texas residents is debt settlement.
Credit cards are another example of a type of debt that generally doesn't have forgiveness options. Credit card debt forgiveness is unlikely as credit card issuers tend to expect you to repay the money you borrow, and if you don't repay that money, your debt can end up in collections.
Although the average settlement amounts to 48% of what you originally owed, that number is a bit skewed. If your debts are still with the original creditor, settlement amounts tend to be much higher. You can end up paying up to 80% of what you owe if the debt is still with the original creditor.
Bankruptcy is your best option for getting rid of debt without paying.
The 1099-C form reports a cancellation of debt; creditors are required to issue Form 1099-C if they cancel a debt of $600 or more. Form 1099-C must be issued when an identifiable event in connection with a cancellation of debt occurs.
Credit cards are another example of a type of debt that generally doesn't have forgiveness options. Credit card debt forgiveness is unlikely as credit card issuers tend to expect you to repay the money you borrow, and if you don't repay that money, your debt can end up in collections.
Debt settlement, when you pay a creditor less than you owe to close out a debt, will hurt your credit scores, but it's better than ignoring unpaid debt. It's worth exploring alternatives before seeking debt settlement.