Credit card debt is nothing new in the United States. But according to the U.S. Government Accountability Office , the level of credit card debt consumers face has reached record highs. Today, Americans owe more than $1 trillion to credit card companies.
“Many Americans today are faced with weathering increased costs from higher-than-average inflation over the past two years, while living on an income that is just not keeping up with those inflation rates,” says Patrick Yono, founder of Sure Life Financial in Novi, Michigan. “As a result, individuals and families are facing more personal debt than many have ever seen in their lifetime.”
What if you’re struggling to find a way to pay your debt off ? In this article, let’s talk about different options to remove credit card debt.
Can credit debt be written off?
The answer to this question is, “yes.” But as you can imagine, there’s nothing simple or easy about getting your credit card debt written off. The process often includes negotiations with credit card companies and debt collection agencies. In some serious cases, it could even include a few appearances at your local courthouse.
How can credit card debt be written off?
It may be possible for you to get your credit card debt written off on your own, you’ll likely find it difficult to do so. In some cases, it’s best to reach out to a debt relief service to assist you in the process.
Debt settlement services may not be able to get 100% of your debt written off, but they’re often able to wipe out a substantial portion of it. Here’s how the process works:
- Payments : You immediately stop paying your creditors when you sign up for a debt settlement program. Instead, you send your payments to the debt settlement company. The debt settlement company will store your payments in a special purpose savings account until you have enough money to settle your debts.
- Settlement negotiations : The debt settlement company starts negotiations with your lenders as soon as your special purpose savings account has enough of a balance to pay the settlements they reach. Although lenders are under no obligation to accept a settlement offer, they often do.
- The writeoff : The debt settlement company pays the lender the settled amount, clearing the debt. The lender then writes off the balance that wasn’t paid for as part of the settlement offer. Keep in mind that the amount of money the lender writes off is considered income for tax purposes. So, here is a twist you’ll need to report your settled debts to the IRS.
For those you want to get out of debt as quickly as possible, but don’t want to deal with the significant credit implications associated with having your debt written off, consider debt consolidation . There are two common ways to consolidate debts:
- Debt consolidation loan : You could take out a loan for the purpose of consolidating high interest credit card debt . If you do, be sure the new loan’s interest is lower than the interest you pay on your credit cards.
- Debt consolidation service : Debt consolidation services typically negotiate lower interest rates and fixed payment plans with your lenders on your behalf. You send a monthly payment to the consolidation service and they send individual payments to your lenders until your debt is paid in full.
