Debt forgiveness, in practice, is a prolonged situation, either requiring repayment of debts, discharge of debts, or expiration of debts under state statutes of limitations. In short, a credit card company will not outright forgive a legally incurred debt. It is possible, however, to negotiate with a lender’s loss mitigation department and drastically reduce the amount paid out to settle the debt. The ultimate success of this process will hinge on the debtor’s ability to utilize outside resources to renegotiate or settle the debt. This should entail seeking counsel from a debt settlement lawyer.
However, should a debt enter into default, the debt will still create issues relating to one’s financial history and credit score. With that being said, a debtor will not be subject to creditor attempts to collect the debt, if negotiated down and repaid. Likewise, if a debtor elects to file bankruptcy, specifically Chapter 7, he or she will be able to discharge all credit card related debt. However, bankruptcy requires a liquidation of all non-exempt assets, and as with negotiated repayment, will impose a serious blemish on credit history.
The final option includes allowing bad debts to expire under the applicable statute of limitations. Again, bad debts or debts in default will incur significant damage on a debtor’s credit history, but once the period of limitations expires, creditors have little or no recourse to collect on the debt. For more information and insight into the debt forgiveness process, it is advisable and highly helpful to consult with a debt settlement lawyer.