Can credit card debt be forgiven?

Hi Jeff,

I am searching for ways to reduce my debts and get my financial future back on track. I am currently drowning in debt and it is causing me enormous stress! While I’m working towards paying it off, it’s going to take a significant amount of time. In the mean time, I was wondering if there is there anything called credit card debt forgiveness?

– Carolyn,


Hi Carolyn,

That’s a very ambitious question but the answer sadly is a no. If you’re lagging behind on paying your bills, your credit card company will not forgive your debt but might be willing to negotiate a settlement with you. If you want to get at least a portion of your debt forgiven, be prepared to do some convincing negotiation. Of course, you can file for bankruptcy but that has its consequences too.

can credit card debt be forgiven

The credit card company might forgive or write off your debtand sell that outstanding debt like an asset to a third party like a collection agency. They can thenfile a legal case against you to collect the debt. Once the collector receives a favourable judgment against you, they can legally take money out of your paycheque or your bank account (also known as garnishing). In addition, the third party can also obtain a judgment and use that to place a lien on your property and when you sell it, satisfy the debt from the proceeds.

You can also consider offering to settle a portion through a lump sum. Most credit card companies are unlikely to forgive all your credit card debt, but on rare occasions, they may accept a smaller amount in settlement and forgive the rest. This means that they are willing to forgo a portion and accept your settlement payment.

Here are three simple steps that you can follow.

Make an offer

Simply pick up the phone, call your credit card company and speak to someone that has the ability to make a debt settlement. State your case and mention the lower settlement amount that you can pay out.

Negotiate hard

Your creditor needs to be convinced that there’s no chance you’ll be able to repay your debt any time soon. You may offer to give that in writing or show proof of a job loss, severe health challenges or a decline in income.

Close confidently

Be prepared to make a couple of calls with back-and-forth negotiations until the creditor agrees to your settlement figure. At the same time, make sure that every part of your settlement is put in writing so that there are no surprises later on.

Lastly, be forewarned that when you choose to settle your debt for less than what you owe, it can have a negative impact on your credit. However, it may still be a better deal than paying late fees and accumulated interest for months or years to come over and above the original amount.

Jeffrey Schwartz

Executive Director

Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada.

If you have a question about a debt management or personal finance, Jeff is here to help. Send us an email with your question to [email protected] You’ll get the expert advice you need and your question may be featured here on our website.