Credit card debt forgiveness is not a “cure-all” for your money problems. Plus, if you attempt credit card debt forgiveness poorly without a clear strategy, it can make financial matters worse.

Your alternative is bankruptcy, which instead of credit card debt forgiveness, restructures all your debt payments or eliminates almost all unsecured debts. Whether you get rid of your debts or modify repayments depends on whether you choose a Chapter 7 or Chapter 13 bankruptcy.

If you are reading this, you probably made some mistakes in handling your finances. To get them back under control and not make another series of mistakes, immediately sign up for the Goalry system and use the budgeting tool, the credit tool, the debt tool, and possibly the loan tool before deciding what to do about your overwhelming credit card debt.

No Fault of Their Own

I hear this phrase on the news all the time. People got into financial trouble through no fault of their own. Yes, the pandemic hammered so many who lost their jobs.

The trouble with this thinking is that CNBC reported that most Americans (63%) live paycheck-to-paycheck. This condition existed before the pandemic. Americans already had overwhelming debts, especially high credit card balances that they could not pay off. Americans are enslaved by credit card debt.

The pandemic made a bad situation much worse. There is no magic bullet to get rid of credit card debt unless you are willing to file for bankruptcy under Chapter 7, which I explain more about below.

How to Get Credit Card Debt Forgiveness

Debt forgiveness means the credit card company agrees that the debt is no longer in existence after a certain amount is paid. This differs from a credit card company writing the debt off because it cannot collect it. Accounts that are write-offs are sold to a collection agency for pennies on the dollar, which will hassle you forever to collect the debt.

One big advantage of using an attorney is, once you inform collectors of the attorney in writing they cannot legally hassle you any longer.

Offering (Forcing) a Credit Card Settlement

If you are behind in your credit card payments, it is possible to offer a settlement amount for less than you owe. You use a legal offering document that if accepted by the lender settles the entire debt. If you plan this strategy, negotiate with all credit card companies at the same time. Identify in writing the sum total of your remaining assets converted to cash. Then, divide it up equally among all the credit card companies. If the amount comes to 1% of the debt owed, so be it. Offer the amount that you can actually pay. If any accept, go ahead with the offer. If they refuse, file bankruptcy and screw them.

Use the Goalry tools first to get educated about your financial condition's details, and then you will be prepared to negotiate with creditors.

Tax Implications of Credit Card Debt Forgiveness

The federal government has the absurd idea that loan forgiveness is the same as earning the money to pay off a debt. Be sure to consult with a qualified tax practitioner before attempting a loan forgiveness strategy because you may create a huge tax liability without even being aware of it. Debts reduced by forgiveness are considered “income,” but debts eliminated by bankruptcy are not.

Bankruptcy to Get Rid of Credit Card Debt

If you file bankruptcy that is based on Chapter 7 rules, you will get rid of all unsecured debts completely, except for student loans and unpaid taxes. If you choose to file bankruptcy under Chapter 13 rules, you will agree to debt consolidation. You will have to pay a reduced amount monthly under court supervision for three years.

A Chapter 13 bankruptcy will damage your credit record as much as a Chapter 7 one does, so unless you have unique circumstances, I do not recommend Chapter 13 bankruptcies. If you fail to complete a Chapter 13 bankruptcy according to your court-approved plan, then, you are right back to where you started. Many who file Chapter 13 at first end up filing Chapter 7 late and extend the painful process of getting out of debt.

Relief from Credit Cards by Forgiveness

It is possible to get relief if you force the credit card companies by threatening bankruptcy. They are more cooperative now because of the pandemic.

If you chose to go this route, if you are a fierce negotiator, you can do it alone. If, you are a wimpy personality type, then, it is best to use a “mouthpiece” of a vicious attorney. If that is not affordable, use a non-profit credit card counseling service that does not charge extraordinary fees and has a quality reputation. It is a good idea to check for the agency’s reputation and if they are certified with the National Foundation for Credit Counseling.

Credit Debt Forgiveness Without Filing for Bankruptcy

You may be able to get credit card debt forgiveness without filing for bankruptcy, but this is only a reduced amount of the credit card debt that you will still have to pay. To achieve this, you must be willing to fight like hell with the credit card companies. You will need to threaten them with going bankrupt and prove to them, you fully intend to pursue bankruptcy to get them to cooperate.

You can use the services of a debt counseling agency or an attorney to negotiate with credit card companies on your behalf. However, you must be extremely careful not to work with a credit agency that is a rip-off. Alternatively, it is going to be expensive to work with an attorney. Most people in this trouble do not have any money to pay off the credit card debts cannot afford to pay an attorney.

How to Slam the Credit Card Companies

I have been able to successfully negotiate lower credit card debt by first eliminating the interest being charged. This only works if you are willing to stop using credit cards completely, and you will go bankrupt.

I worked with the credit card companies directly after the real estate collapse in 2008 left me in a multi-million dollar financial hole. It was “no fault of my own” that the bank, Washington Mutual went bankrupt before I did. The bank could not give me the money for my approved construction loan to construct a housing development in Las Vegas.

I went from being rich to over-my-head in debt with no way out of the problem in a matter of a few months during 2008. At the time I had about $250,000 in credit card debt, which was normal for me because I either paid it off every month when I had cash flow or when in this case the project phased to the next level of planned financing. Yes, I charged concrete sewer pipes on my credit cards!

Please don’t be worried that I ended on the number 13 step above or feel bad about my sob story. That was over 12 years ago. The bankruptcy is no longer on my credit history. Chapter 7 bankruptcies stay on your credit history only for 10 years. More importantly, I did not lose my skills in bankruptcy, and I am once again a wealthy man.

The point of the story is that this experience completely freed me from credit cards. I use only debit cards now. I refuse to use credit cards. The interest rates are so high on credit card debts because they are not secured by anything and there is such a high rate of default. If you pay the monthly minimum on credit card debts you will never pay them off.

Did you sign up for Goalry yet? If not, what the heck are you doing? Seriously, stop ordering stuff online with your credit cards and pay attention. You want to be credit card debt free!

The high-interest rates on credit card debts are to cover all the losses from people who default. If you are paying credit card interest you are covering the problems caused by others.

Living without Credit Cards

I have not missed the credit card bills at all. I found that a debit card is just as good if you maintain at least six months of your salary in your bank account for emergencies. Since I write for my work now as I am in semi-retirement, my income actually went up from the pandemic.

So many people had to stay home. Online activities increased. I was already working from home so all the pandemic did was keep meat home, plus increase my pay and workload.

That’s all good for me because the money I earn from writing goes to pay for food for my dog rescue efforts. I have about 30 dogs that I take care of who were abandoned.

Avoiding Harm to Your Credit History

If you see a problem developing in your future using the Goalry tools, you can contact the credit card companies before you get into trouble. This is something the credit card companies are dealing with in a massive amount due to the pandemic.

This works because you call to talk to your credit card companies before you are in arrears (past due bills) and speak with the hardship department. Be aware that when you call them your credit cards will no longer be usable. They will cut you off. Also, is a terrible idea to run up your credit cards right before going bankrupt and might even get you into trouble for fraud.

Tell the hardship department nicely you are reviewing options before filing bankruptcy. This will force them to give you the best deal they offer. Whatever they offer, always say, “Is that the best you can do?”

A hardship program may include some or all of the following:

Other Credit Card Debt Solutions

Besides bankruptcy, there are no “quick-fix” remedies to get rid of credit card debt. Usually, when someone is up to their eyeballs in credit card debts, they also have a pile of other debts to deal with as well.

Here are a few other strategies to consider while using the Goalry tools to organize your financial situation:

Special Information for Low-Income Seniors

Seniors who only get Social Security, another retirement distribution, or disability payments are “judgment proof.” These funds cannot be garnished (taken by creditors). If you are a low-income senior paying rent, you are judgment-proof. A debt collector can get a judgment against you, which is a court order that says you owe a certain amount. However, if you do not have any assets, salary, or wages, enforcing the judgment (making you pay it) is impossible.

Not paying credit card debts if you are in the condition will make them damage your credit history. It will lower your credit score but not have an actual financial impact on your life.

If you own a home a creditor can get a lien on it, which is only collectible if the home sells or the title transfers. They cannot take your home away. One way to enjoy a satisfying life might be to die owing a lot of credit card debts. You will have the last laugh from your grave!

Please do not take anything I say as legal advice because I am prohibited from doing that since I am not a lawyer. Instead, learn more about it and consult with appropriate legal counsel.

Conclusion

Getting credit card debt forgiveness provides some relief, but it is really challenging to obtain this relief. For those who faced a sudden loss of a job caused by the pandemic, the experience can be gut-wrenching. Put guilt aside. It is best to recognize your financial condition is not the same as your value as a person. It is easier to think of yourself as someone you want to help get out of trouble.