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How effective is credit card debt forgiveness?

New Jersey consumers who are finding it difficult to maintain payments on their credit cards may be searching for effective ways in which to handle their dilemmas. In some circumstances, creditors may be accommodating about credit card debt forgiveness if they fear that the account holder may file for bankruptcy. However, one concern for the person owing the debt is the fact that forgiven debt is taxable.

Typically, credit card companies will only negotiate with card holders whose payments are behind with three or more months. By that time, the credit score of the individual may have suffered a significant drop. Also, debt settlement programs can be long-term processes, and after two or three months of non-payment, creditor harassment may start. If a judgment is obtained, it will cause further havoc to the credit score. Wage garnishments or other enforcement actions may have been initiated by that time.

Credit card holders may benefit from exploring other options. For instance, filing for Chapter 7 bankruptcy can bring almost instant debt relief. It is true that it will also impact a card holder's credit score, but the discharged credit card debt will not trigger a tax bill. Also, as soon as a person has filed for bankruptcy, an automatic stay is activated that will stop any creditor harassment, repossessions, wage garnishments and more.

Consumers with mounting credit card debt may benefit from consulting with an experienced New Jersey bankruptcy attorney. After assessing the circumstances, a lawyer can explain the different bankruptcy options that are available. Being fully informed may assist a consumer in making decisions that might get him or her back on financial track.

Source: nerdwallet.com, "Debt Forgiveness Always Has a Catch", Liz Weston, June 26, 2016

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Goldman & Beslow, LLC is a Federal Debt Relief Agency by an Act of Congress. We have proudly assisted consumers seeking relief under the U.S. Bankruptcy Code for over 38 years.

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