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Is credit card debt ever forgiven?

With the average household credit card debt nearing $6,200 in the U.S., many Americans struggle to keep up with monthly payments and wonder if credit card debt is ever forgiven. Unfortunately, credit card companies are not required to forgive or cancel debt. However, there are some rare cases where credit card debt can be negotiated, settled for less than owed, or even wiped away entirely.

Can credit card companies forgive debt?

Credit card companies are under no obligation to forgive or cancel debt. They can, however, choose to settle debt for less than the full amount as a business decision. This usually only happens if the account is severely delinquent and the credit card company believes it has little chance of collecting the full amount owed.

Settling debt for less than owed does not cancel the remaining balance – the credit card company essentially agrees to accept a lump sum payment that is less than the total debt as payment in full. The account is then closed. This can provide relief to the consumer but will also likely damage their credit score.

When will credit card companies negotiate debt?

Credit card issuers may be willing to negotiate and settle debt if:

  • The account is at least 120 days past due
  • The consumer has a long history of late payments and default
  • The credit card company has made multiple attempts to collect with no success
  • The consumer has experienced a major financial hardship

In these cases, the credit card company may determine they have little chance of being repaid in full. By accepting a settlement, they can at least recover a portion of the money owed.

What is debt validation?

Under the Fair Debt Collection Practices Act, consumers have the right to request debt validation if contacted by a third-party debt collector. This requires the collector to provide proof that the debt is valid and the consumer is responsible for payment.

If the collector cannot validate the debt within 30 days, they must stop all collection efforts. While this does not cancel the debt, it can buy time and possibly lead to the creditor dropping the account if they cannot prove it is the consumer’s responsibility.

When can credit card debt be forgiven in bankruptcy?

Filing for bankruptcy can eliminate credit card debt under certain conditions. There are two main types of consumer bankruptcy:

  • Chapter 7 bankruptcy – Liquidates assets to pay back debt. Remaining unpaid debt, including credit card balances, is discharged.
  • Chapter 13 bankruptcy – Establishes 3-5 year repayment plan. Upon completion, remaining credit card balances are discharged.

To qualify for debt discharge under Chapter 7, consumers must pass a “means test” showing they lack income to repay debt. Chapter 13 has income requirements but no means test.

Will credit card companies negotiate debt in bankruptcy?

Credit card issuers are often willing to negotiate debt during bankruptcy proceedings to avoid discharging balances entirely:

  • They may agree to reduced lump sum settlements
  • Accept lower monthly payments under Chapter 13 plans
  • Settle for a percentage of the total balance (ex. 50%)

This provides some payment while allowing the consumer bankruptcy relief. Both sides can benefit since discharge wipes debt completely.

When can medical debt lead to credit card debt forgiveness?

If medical issues contributed to credit card debt, informing issuers may spur goodwill forgiveness. Issuers have discretion to close accounts and discharge balances if consumers experienced:

  • Lost income due to illness/disability
  • High medical bills not covered by insurance
  • Mounting costs of long-term treatment or caregiving

This is not guaranteed but appealing to issuers’ empathy may motivate them to grant relief in truly difficult situations caused by medical hardship.

Will credit card companies forgive debt after death?

After a cardholder dies, credit card companies may forgive unpaid debt if requested by next of kin. However, they are not legally required to do so in most cases. Deceased debt is paid from the person’s estate.

The exception is if debt is secured by property with a co-signer. For example, if a deceased person’s spouse co-signed a home equity loan or line of credit. The spouse could request the lender forgive the loan, allowing them to keep the home.

When can credit card debt be forgiven due to unlawful collections?

If credit card companies or collectors break debt collection laws, consumers may be able to request debt forgiveness:

  • Collectors may be forced to erase debt if they falsely represent themselves, make illegal threats, excessively call, or publicly disclose your debt in violation of the FDCPA.
  • Issuers may discharge debt if they commit unfair practices like excessive fees or interest rate hikes.

Documenting unlawful collections and contacting regulators like the CFPB can lead to debt relief, but outcomes vary case-by-case.

What is credit card hardship programs?

Issuers understand shutting accounts can actually worsen consumers’ financial issues. So most offer hardship programs with options like:

  • Lower interest rates (as low as 0%)
  • Reduced monthly payments
  • Waived fees
  • Balance forgiveness over several months of on-time payments

Hardship programs provide temporary relief for consumers facing unavoidable circumstances like medical problems or job loss. They can help avoid default or bankruptcy.

When are credit card debt relief scams?

Beware “credit repair” companies claiming they can legally erase credit card debt. Debt forgiveness is rare and only issuers/collectors have the discretion to settle or cancel balances.

Warning signs of debt relief scams:

  • Upfront fees – It’s illegal to charge before services are rendered
  • Guarantees of cancelled debt – No one can promise specific results
  • Requests for bank account or credit card numbers
  • Advice to stop paying creditors

Consumers should report suspicious activity to the FTC and consult reputable non-profit credit counseling services for assistance.


Overall, credit card companies have no obligation to forgive debt. They may choose to settle severely delinquent accounts but are unlikely to erase debt out of goodwill.

Bankruptcy provides the most reliable path to credit card debt discharge but this heavily damages credit scores. Consumers generally have better outcomes contacting issuers directly to negotiate hardship programs or payment plans tailored to their financial situation.

While credit card debt forgiveness is rare and should not be an expectation, consumers do have various options to manage overwhelming balances. Seeking help from reputable credit counseling services is recommended over dubious companies claiming they can legally erase credit card debt.