“A totally forgettable, disastrous year,” Briggs said. “I was in debt way over my head … COVID was killing my business … I couldn’t get out and hustle … It felt like I was about to lose everything … but then I got rescued.”
The savior turned out to be a new debt-relief program from InCharge Debt Solutions called the “Less Than Full Balance” program or as it’s commonly referred to the “Credit Card Debt Forgiveness” program.
The major selling point of the forgiveness program is that consumers can pay 50%-60% of what they owe over a three-year period to settle their debts. Creditors forgive what is left of the balance. In Briggs case, he says he had $45,000 in credit card bills, but the credit card forgiveness program reduced that to a manageable $23,000.
When the calendar changed to 2021, Briggs’ properties suddenly got hot again and he not only was able to make the monthly payments of $700, he actually paid the full tab of $23,000 in just seven months.
“No penalty for paying off early so I made the last payment and I was done!” Briggs said, emphatically. “Paying off credit cards is easy when the money is rolling in, but that’s a slippery slope when the money dries up. I was using my cards for every single purchase in 2020. That was my mistake and I take responsibility.
“But my attitude about credit cards has completely changed. The Less Than Full Balance program made me realize I couldn’t live off credit. The InCharge credit counselor who took care of me was fantastic about this and I’ve learned my lesson.”
How Did the Credit Card Debt Forgiveness Program Begin?
The list of choices for people seeking debt relief has been consistent for quite some time – debt management, debt consolidation, debt settlement or bankruptcy – but there’s something new on the menu that will satisfy your hunger to get out of debt.
Introducing the “Credit Card Debt Forgiveness” program.
The program is exactly what the name suggests. A portion of your credit card debt is forgiven – as much as 40% to 50%, in most cases! – in exchange for consistent payments for 36 months.
So, if you owed $50,000 in credit card debt and were accepted in the Credit Card Debt Forgiveness program, you would pay back $25,000 in monthly payments spread out over three years. This doesn’t go unnoticed by the credit rating bureaus – your credit score will take a hit – but it does show you’re taking an active role in reducing your debt. Keep in mind, if your account is already charged off, your credit is impacted. After settlement, the account will be reported as paid with a zero balance, rather than outstanding with a collections company.
The new program has some conditions that must be met (and will be discussed below), but know this: Credit Card Debt Forgiveness could be the option you need for dealing with debt.
How Does the Credit Card Debt Forgiveness Program Work?
Credit Card Debt Forgiveness is a clever mix of one part debt management, with one part debt consolidation and one part debt settlement so that you have no part of bankruptcy.
The forgiveness agreement requires you to make a fixed monthly payment (like debt management), on a debt that combines credit card bills (like debt consolidation) for an amount that is far less than what you originally owed (like debt settlement).
The first step is to call a nonprofit credit counseling agency like InCharge Debt Solutions and have a certified counselor go over your finances to determine if this is the right solution for your problem. Counselors ask questions about your monthly income and expenses and pull a credit report to verify how many bills you have and what you owe on them to gauge the extent of your hardship.
If the forgiveness program is the best solution, the counselor will send an agreement that details the plan, including the monthly payment, and send it to the participating credit card company for their approval.
Once the creditor agrees, you begin making monthly payments and in 36 months or less, you have paid off the debt. There is no penalty for paying off the debt early. That is a similar goal for debt management, consolidation and settlement.
How Do You Participate in a Credit Card Debt Forgiveness Program?
The easiest and fastest way is to call the credit counselors at InCharge Debt Solutions and let them examine your financial situation.
There are four conditions that must be satisfied for you to participate in a Credit Card Debt Forgiveness program:
- Your creditor must be on the list of creditors, banks, law offices or debt collection agencies that agreed to participate in the program.
- Your account must be charged off completely, meaning you haven’t made a payment in over 120 days.
- You must have a balance of at least $1,000.
- The balance must be paid off in 36 months. There are no extensions allowed.
If you miss a single payment at any point during the 36 months, the creditor will cancel the program and your balance will go back to the original amount, minus whatever you paid to that point. It is extremely important that you understand the penalty for one missed payment.
Note that any balance forgiven above $600 is subject to income tax.
Why Can’t I Participate If I’m Already Paying on My Account?
If you have an “active” account, meaning you paid something on the debt the last six months, other debt-relief solutions are available to solve your problem.
Credit Card Debt Forgiveness programs work only with “delinquent” accounts, meaning those that have not been paid on in 120 days and are expected to be written off by creditors.
Traditionally, credit card companies sell delinquent accounts to law offices or debt collection agencies for pennies on the dollar and write them off the books.
However, with the debt forgiveness program, the creditor can decide if they want to sell your debt to debt collectors or keep it on the books and see if they can receive at least 50%-60% of what is owed through the Credit Card Debt Forgiveness program.
How Does Credit Card Debt Forgiveness Compare with Debt Settlement?
The two are identical in two ways – their program is built around a client paying less than what is owed and taking a negative hit on your credit score – but that’s about it for similarities.
The Credit Card Debt Forgiveness program already has relationships with creditors who may accept 50%-60% of the balance owed. When the agreement is signed, each monthly payment reduces the balance until it is paid off in 36 months.
Debt settlement negotiates with each creditor, usually over a 2-3 year period, and can only hope that creditors agree to accept 50%-60% payment. Also, the balance continues to grow during the 2-3 year period because of late payment penalties and interest charges.
The forgiveness program has equal payments spread over 36 months. If the client wishes to pay the sum off early, they can without penalty.
Debt settlement asks its clients to stop paying the creditor and instead make monthly payments into an escrow account, which will be used to make a lump-sum offer to settle the debt. In the meantime, the account balance is growing because of late payment fees and interest charges.
When you join a forgiveness program, you’ll know upfront if your creditors accept the terms.
Creditors do not have to accept debt settlement offers.
One last consideration: If you enroll in the Credit Card Debt Forgiveness program, it stops collection agencies and law offices from trying to recoup the debt. That includes halting lawsuits filed to collect the debt. That kind of litigation could result in you having wages garnished or liens put against your property.
Relief from a possible lawsuit is a great reason to consider Credit Card Debt Forgiveness.
So is the relief of knowing you can afford to pay off your debts.
“The highlight of the program for me was that it stopped the debt collectors from calling and harassing me all day and night,” Briggs said. “The other highlight was the attitude of the counselor that we could get this done. I was feeling like it wasn’t going to happen, but she kept with me and we got it done. I’m really feeling blessed now.”