Latest news with #debtforgiveness
CBS News
21 hours ago
- Business
- CBS News
How much credit card debt is too much for debt settlement?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. Debt settlement can offer significant relief to the right person, but there's a point when your debt might actually be too much for this approach. Getty Images There's no question that credit card debt has become a major issue over the last few years, with the total amount of credit card debt nationwide now sitting at a staggering $1.17 trillion. That equates to the typical cardholder owing about $8,000 at a time when the average credit card rate is nearly 22%. But for many households, these figures aren't just statistics. They represent a growing financial burden, one that's making it harder to stay current on their monthly card payments. As a result, many of the people who are struggling to pay down their card debt are now opting to explore their options for relief. While there are numerous debt relief strategies to consider, debt settlement, also known as debt forgiveness, can offer significant relief by allowing you to negotiate with creditors to try and settle for less than what you owe. That approach can work well for some, especially when balances are high and repayment options are limited. There's a catch, though. At a certain point, your debt may actually be too large for settlement to be effective. So, how do you know when you've crossed that threshold? Below, we'll detail what to consider before going all in. Start tackling your high-rate credit card debt today. How much credit card debt is too much for debt settlement? There's no hard cap on the amount of credit card debt that can be settled. In theory, you can try to settle $5,000 or $150,000 in credit card debt. But in practice, once you hit a certain threshold — usually around $100,000 — the risks and limitations of debt settlement become more pronounced. Why does this happen? There are a few key reasons: Creditors are less flexible when the stakes are higher If you owe one creditor $30,000 or more, they may be less willing to settle, especially if they believe they can recover the full amount through a lawsuit or collections. The bigger the balance, the more motivated they may be to go after you through legal means rather than negotiation. Explore your debt relief options and find the right strategy now. You need enough income to fund a settlement Debt settlement typically involves stopping payments while you save up enough money to fund lump-sum settlement offers. But the more debt you have, the more money you'll need to save — and fast. If you're settling $100,000 worth of credit card debt, for example, you may need to come up with $50,000 to $70,000 in a matter of months or a few short years. For many people, that's just not a realistic goal. The fees can get steep With a high amount of card debt, it makes sense to work with a debt relief company on your settlements. After all, their negotiation expertise and creditor relationships may come in handy when trying to settle big balances. However, most debt relief companies charge fees of between 15% to 25% of the enrolled debt in return for the work they do. So, if you're trying to settle $120,000 in credit card debt, you could be looking at $18,000 to $30,000 in debt relief fees alone. That doesn't include taxes you may owe on forgiven debt. The timeline can stretch out too long Settling a small amount of debt — let's say $15,000 — might take 24 to 48 months. But if you're trying to settle $100,000 or more, you're probably looking at a program that lasts five years or longer. That's five years of missed payments, credit damage and potential collection lawsuits. So what's the ideal range? Debt settlement tends to work best for people with between $7,500 and $75,000 in unsecured debt who have already fallen behind on payments and don't have the income or credit to qualify for debt consolidation loans. Once your debt exceeds $100,000, settlement can still be done, but it may not be the most efficient or cost-effective option. What are the debt settlement alternatives? Debt settlement can be useful, but it's not the only option, and may not be the best first step. Here are some alternatives worth considering: The bottom line Debt settlement can be a powerful tool, and if you're carrying $10,000 to $75,000 in credit card debt and are already behind on payments, it might be worth exploring. But if your balances are soaring past the $100,000 mark, the math starts to work against you. At a certain point, trying to settle huge balances can leave you facing high fees and potential lawsuits, all with no guarantee of success. In those cases, other types of debt relief may offer faster, cheaper, and more permanent solutions. The key is understanding what's available to you and choosing the solution that fits your financial reality — not just the one that sounds best in theory.
CBS News
2 days ago
- Business
- CBS News
Plan to apply for credit card debt forgiveness this July? Do these 3 things first.
Credit card debt forgiveness could wipe out some of your existing balance, but you shouldn't necessarily rush into the process. Getty Images/iStockphoto With the average credit card debt around $8,000 currently, it's no wonder that many Americans are searching for debt relief. Combined with the fact that the average credit card interest rate sits just under a record 23% and the reality that compounding interest is making it increasingly difficult to pay off previously manageable balances, credit card debt forgiveness may seem like the solution many borrowers are searching for. And it very well can be. This type of debt relief, for qualified borrowers, can eliminate 30% to 50% of your credit card debt, providing the help you need to get back on track and dig out of debt once and for all. But if you're planning on applying for credit card debt forgiveness soon, there are some things you may want to consider doing first. Instead of immediately applying this July, then, we compiled a list of items that you should consider before taking action. Below, we'll detail three of them. Start by checking your credit card debt forgiveness qualifications online here. 3 things to do before applying for credit card debt forgiveness this July Don't rush into a credit card debt forgiveness plan this summer before first taking these three steps: Determine if you (really) need it Credit card debt forgiveness may seem like a quick way to regain your financial freedom, but it's not exactly quick (it can take 24 to 48 months) and it may not be something you really need anyway. Do you have healthy spending habits? Do you have the budget to pay off what you owe without having to ask for help or forgiveness? Remember, not only will this service take multiple years, but it will also damage your credit score, and it will likely come with tax implications. So take the time, first, to determine if you even need it. You may be surprised by the answer you come up with. Learn more about your credit card debt forgiveness options here. Explore all alternatives You should never pursue your first offer, and fortunately for those in debt, there are multiple options available. Ranging from debt management programs to credit counseling to debt consolidation loans and more, there may be a viable alternative for you that won't come with the lengthy process and credit score ramifications that a debt forgiveness program offers. But you won't know which is the right fit for your unique circumstances until you take the time to explore all of them. Keep credit card debt forgiveness as the backup option until you've fully examined your other, potentially more appropriate, debt relief options. Shop around for servicers Once you've determined your genuine need for credit card debt forgiveness and compared it to all alternatives, you'll want to spend some extra time shopping around for servicers. Not every debt relief company will offer this unique solution, nor will every debt relief company have identical eligibility criteria or fees associated with their programs. It's important, then, to shop around for servicers to find a legitimate one that's most cost-effective for your debt balance (there will be a fee you'll need to pay for this type of help). This will have the unfortunate consequence of delaying a forgiveness program until later in the summer but if the alternative means getting stuck in a program that you can't afford and won't help, it's a delay well worth enduring. The bottom line Credit card debt forgiveness may or may not be the debt relief solution you need this July. By making the three aforementioned moves, however, and by keeping an open mind about your balance and the reasons you got stuck in debt to begin with, you can begin the delayed work of regaining your financial freedom. Just be sure that whatever solution you ultimately decide on is the right one for you, both now and into the future -- and not one that just seemed quick and pain-free this summer. Learn more about your potential debt relief options online today.
ABC News
3 days ago
- Business
- ABC News
Calls for energy debts to big companies to be wiped
As parts of the country feel the bite of a cold snap a new report is warning hundreds of thousands of Australians are in debt over energy bills. Anglicare has released a new report finding households on minimum are struggling with as little as $33 for left over after paying for rent, food and transport. They're now calling for more to be done including debt forgiveness for those doing it tough.
New York Times
4 days ago
- Business
- New York Times
No, a TikTok Trick Won't Erase Student Loan Debt
TikTok videos, some with tens of thousands of views, are claiming that borrowers can have all their student loans erased by following a few simple steps. 'I just got approved today, and I don't really know what approved means,' one TikToker says in a video posted in April. She explained that she disputed the line on her credit report that referred to her student debt, and had it removed from the credit report. 'Does that mean I'm not going to have to make payments?' she says. The answer is clear, experts say: No. Left unpaid, experts warn, these loans can inflict severe long-term financial damage. Even though parts of the federal student loan system are in flux, borrowers are still on the hook for student loans, even if some have them wiped from credit reports by disputing them. Here's what to know: What are the videos saying? One TikTok video that has racked up more than 200,000 views begins: 'This is how to delete your student loans.' Some videos claim that because the so-called Department of Government Efficiency, the Trump administration's federal cost-cutting initiative, gained access to student loan data, student borrowers can file a complaint about violation of privacy rights (under the Family Educational Rights and Privacy Act, known as FERPA) and have their student debt erased. Other videos state that student loan borrowers can erase their debt merely by disputing it on their credit reports, which usually make reference to the loans. Want all of The Times? Subscribe.
Yahoo
14-06-2025
- Business
- Yahoo
Student loan debt relief scams rise as repayment resumes
LAS VEGAS (KLAS) — Student loan payments are back for millions, but so are scammers. Millions of borrowers need to be on high alert, and 36-year-old Devin Virissimo is one of those. He works here at 8 News Now, and starting in August, he will begin paying back his loans. 'Honestly, it's going to be like a whole car payment,' Virissimo said. 'I've already started budgeting now.' The pause on federal student loan payments, as a COVID-19 relief measure, ended nearly five years after it began. Virissimo graduated from UNLV in 2021. He, like millions of others, received notification two months ago about the loans he needs to start paying off. 'Sitting about 25 thousand in student loans.' Millions of borrowers are at risk of becoming victims of student loan-related scams. Experts say scammers are personalizing texts and phone calls with AI, but don't be fooled. Messages coming your way with time-sensitive offers or special promotions should be a red flag. Guardio Vice President Karin Zilberstein said quick fixes like debt forgiveness or reduced payments for a fee are also a red flag. 'Nobody will ask you or offer you ways to pay your loans,' Zilberstein said. 'People should be suspicious when they see such offers.' These messages are not coming from the U.S. Department of Education or its partners. The scammers require you to pay up-front or monthly fees for help. They try to get your credit card number or bank account information. In some cases, they may even step in and ask you to pay them directly, promising to pay your servicer each month when your bill comes due. Free assistance is available through your federal loan servicer. Virissimo, meantime, verified the information he received was legitimate, before agreeing to the terms of his repayment plan. 'Eight payments of about 50 dollars, and then 120 payments of 250 dollars after that.' Many student loan debt relief companies charge a fee to provide services that you can take care of yourself for free by contacting your loan servicer. At no cost, the U.S. Department of Education and its federal loan servicers can help you lower your monthly loan payment, change your repayment plan, consolidate multiple federal student loans, and postpone monthly payments while you're furthering your education or are unemployed. Go to for more information. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
