Credit card debt forgiveness vs. hardship: Which debt relief option is best?

Credit card debt forgiveness vs. hardship: Which debt relief option is best?


Both credit card debt forgiveness and hardship can help get rid of credit card debt, but which one makes more sense for you?

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Credit card debt has become an increasingly prevalent issue over the last few years, with the problem exacerbated by a mix of high rates, economic uncertainties and rising living costs. As a result, the total amount of credit card debt nationwide hit a record high of $1.14 trillion in the third quarter of 2024, an increase of $27 billion from one quarter prior. That equates to the average cardholder having nearly $8,000 in credit card debt

An uptick in spending isn’t the only issue, either. Credit card rates are also sitting at a record high of nearly 23% on average. At that rate (or higher), any credit card debt that’s carried over will grow quickly due to the interest charges, making it tough for cash-strapped cardholders to keep up. And with inflation driving up the prices of consumer goods, many cardholders have become reliant on their cards to fill in the gaps, further exacerbating the issue.

For those facing serious credit card debt, two debt relief options — credit card debt forgiveness (also known as debt settlement) and credit card hardship programs — can provide a path forward. With debt forgiveness, the goal is to negotiate with creditors to pay less than the full amount owed, typically as a lump sum. Hardship programs can temporarily reduce interest rates, waive fees or lower minimum payments for those experiencing financial difficulties. But which option is better for you?

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Credit card debt forgiveness vs. hardship programs: Which option is best?

When it comes to choosing between credit card debt forgiveness and hardship programs, there is no universal solution. Both options offer a range of benefits to cardholders and the best choice typically depends on your goals and financial situation.

For example, debt forgiveness can be attractive if you have a large amount of credit card debt you’re unable to pay, as it offers the possibility of reducing the total amount owed. This option may be particularly appealing if you have the means to make a lump-sum payment or can save up to do so. 

Credit card hardship programs, on the other hand, can be a good fit if you’re experiencing financial difficulties but expect your situation to improve soon. These programs provide quick relief, making it easier to keep up with your obligations without defaulting. They also typically have less severe impacts on your credit score, but the relief is temporary.

Find out how working with a debt relief expert could benefit you today.

When credit card debt forgiveness makes more sense

This may be the better option if:

  • You have a large debt burden: If you’re struggling with a substantial amount of credit card debt that you’re unlikely to pay off, debt forgiveness could provide a way to resolve your debts for less than the full amount.
  • You’re facing a financial crisis: In cases of severe financial hardship, such as long-term unemployment or major medical expenses, debt forgiveness might be necessary — especially if you’re unable to make reduced payments through a hardship program.
  • You have multiple creditors: If you have debts with several different credit card companies, debt forgiveness can simplify the process by allowing you to negotiate with all creditors simultaneously through a debt settlement company.
  • You’re willing to accept the credit score impact: If you’re willing to take a credit score hit in exchange for potentially resolving your debts faster, settlement might be appropriate.
  • You’re able to save for lump-sum payments: Debt settlement typically requires you to stop making payments to your creditors and instead save money for lump-sum settlement offers. If you have the discipline and means to do this, it could be effective.

When credit card hardship programs make more sense

Credit card hardship programs may be more appropriate if:

  • You’re facing a temporary financial setback: If you’re experiencing a short-term financial difficulty, such as temporary job loss, but expect your situation to improve, a hardship program can provide the room you need to get back on track.
  • You’re concerned about your credit score: While hardship programs may still affect your credit score, the impact is generally less severe. If maintaining a higher credit score is important to you, a hardship program might be preferable.
  • You’re able to make reduced payments: Hardship programs typically require you to continue making payments, though the amount is typically lower. If you can manage these reduced payments, these programs allow you to continue paying down your debt while receiving some relief.
  • You have limited credit card debt: If you’re struggling with debt from just one or two credit cards, working directly with those issuers may be more straightforward than pursuing debt settlement.
  • You want to take on less risk: Hardship programs generally involve less risk than debt settlement, as you’re working directly with your creditors on a solution.

The bottom line

Both credit card debt settlement and hardship programs offer potential paths to debt relief, but the best option for you will depend on factors like the severity of your financial difficulties, the total amount you owe, your ability to make payments and your long-term financial goals. By choosing the option that best aligns with your specific circumstances, you can take a significant step toward regaining control of your finances and building a more stable financial future.



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