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What Is Credit Card Debt Forgiveness?

6 min read

Last Updated: June 6, 2025

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Key Takeaways

Debt forgiveness is when a company cancels some of or all of a borrower’s outstanding balance and the borrower no longer owes that debt amount.
Credit card debt forgiveness is uncommon, but other solutions exist for managing debt.
A debt relief program or a debt consolidation loan is another option to reduce your debts.

Financial hardship can affect anyone. If your credit card debts are piling up, you may feel overwhelmed. But there may be options for debt management. Credit card issuers sometimes work with borrowers to find solutions for unpaid debt. And, though total credit card debt forgiveness programs are rare, you may qualify for some debt relief.

Are you wondering how to get credit card debt forgiven? Educating yourself is the first step in debt forgiveness or other debt relief.

Do credit card companies forgive debt?

Debt forgiveness is when a credit card issuer or another lender cancels some of or all of a borrower’s outstanding balance, so the borrower no longer owes that debt amount. Examples of debts that a lender may forgive include credit cards, student loan debt, medical debt, a mortgage (through foreclosure), or even a personal loan.

What happens if credit card debt isn’t forgiven?

When you fall behind on your credit card bill, the credit card company typically tries to collect the debt through an internal debt collection department first. If the card issuer still doesn’t receive a credit card payment, an external debt collector or collections agency may try to collect the unsecured debt.

If the creditor or collections agency still can't collect the outstanding debt, the credit card company may file a lawsuit. A successful lawsuit may result in a judgment. In some states, consequences for a judgment from a debt collector may include garnished wages to repay the balance. You may be able to avoid these consequences by contacting the credit card company to discuss the situation, or seeking assistance from a nonprofit credit counseling organization.

Some credit card companies, like Discover^®, offer hardship programs that may help you meet your financial obligations.

Did you know?

Depending on your credit score, you could consider a balance transfer card, which could help consolidate your monthly credit payments and reduce your interest charges with a low intro APR.

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Debt forgiveness vs. debt relief

Debt forgiveness programs are uncommon. A debt consolidation or debt relief program may be a useful alternative.

Debt relief or debt consolidation programs don’t forgive your debts. Instead, they may offer an easier pathway to debt repayment. You may be able to:

Restructure your debt
Combine multiple debts
Get a lower interest rate
Reduce your monthly payments

Some people choose to work with debt settlement companies to help restructure debt. Be cautious when working with a debt relief company or debt settlement company. There may be risks associated with debt settlement companies, according to the Consumer Financial Protection Bureau, so it’s important to research your options first.

For example, debt settlement offers that “guarantee” they'll be able to settle your debt may be scams. These companies may also advise you to stop paying your credit card bill—even the minimum monthly credit card payment—which may lead to late fees, high interest, and a negative impact on your credit score. Fraudulent debt settlement programs may also charge a big debt settlement fee, putting you deeper into debt.

Because of the dangers associated with debt settlement programs, a nonprofit credit counselor may be a better option for debt resolution.

Credit counseling

A practical option for debt relief may be to work with a nonprofit credit counseling agency.

This type of organization offers credit counseling services to help empower you during a challenging financial situation.

A credit counselor may help you address existing debt and overall money management. With a credit counseling organization, you may create a debt management plan and get support in restructuring your budget. They may also advise you about debt solution tools.

If you have multiple debts, a credit counselor may help you navigate a credit card consolidation or debt consolidation loan. If you’re juggling several credit card or personal loan bills, a debt consolidation loan may help you combine them into one manageable monthly payment with a low interest rate. Support like this from a credit counselor may leave you more hopeful and less stressed.

Types of credit card debt forgiveness

Two types of credit card debt forgiveness are debt settlement and bankruptcy.

Debt settlement

Debt settlement is when a lender agrees to let a borrower pay less than the total outstanding balance. For credit card debt settlement, you may be able to work directly with a card issuer to create a debt management plan instead of paying a debt settlement fee to a for-profit debt settlement company to negotiate the agreement.

It’s important to note that while a creditor may be willing to stop collections on a portion of your debt as part of a debt management program, the card issuer may have to report the settled debt to the Internal Revenue Service (IRS) as canceled debt. In those cases, canceled debt may be taxable, according to the IRS.

Debt forgiveness through bankruptcy

Bankruptcy may offer another type of debt relief. When you declare bankruptcy, it can stay on your credit report for up to 10 years, which can negatively impact your credit score and may affect your ability to get new credit or open credit cards.

According to U.S. Courts, when you declare bankruptcy, a court may discharge certain types of debts, like medical debt, while restructuring others and preserving assets. Discharging a debt in bankruptcy releases you from personal liability. Individuals may represent themselves in bankruptcy court or consult a bankruptcy attorney if they feel they need to pursue this option.

In a Chapter 7 bankruptcy, the individual may need to sell some of their assets to pay a portion of the outstanding debt. In a Chapter 13 bankruptcy, the court restructures the outstanding debts so the individual may pay all or some of the agreed-upon balance over three to five years. Under Chapter 13, the debtor must complete the payment plan to receive a discharge of the remaining debts.

Secured debt, like a mortgage, which includes collateral (usually the financed house), and unsecured debt, like credit card debt, are handled differently during a bankruptcy. And there are various types of bankruptcies, so be sure to research which option may be best for your situation.

The bottom line

If your credit card bills are snowballing, researching debt forgiveness, debt relief, and debt settlement options can be a good start. Credit card debt forgiveness is rare, but your credit card issuer may be willing to negotiate with you. You can also consider debt relief options like finding a nonprofit credit counseling organization to help you resolve debts in a manageable way with less stress.

When you’ve resolved your debt and want to start rebuilding your credit, a secured credit card may be a viable choice.

A secured card is a real credit card that requires a cash deposit at account opening, which becomes the credit limit on the account. With responsible use, you could rebuild your credit history with the Discover it^® Secured Credit Card.¹

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Keep in mind that the qualifications and requirements for secured credit cards may vary from card issuer to card issuer. Review the terms and conditions for a secured card, and consider a card that offers pre-approval, especially if you’ve ever filed for bankruptcy.

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