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The previous decade ended on a high note. Unemployment was low, the economy was performing above expectations, and it seemed like we were set for a prosperous decade. The roaring twenties, an age of abundance. But then 2020 happened, Coronavirus struck, and all that positivity disappeared in a way of paranoia, fear, and isolation.
The CARES Act has helped to soften the blow somewhat, but it seems highly likely that 2020 and 2021 will be defined by increasing consumer debt and incredible financial strain.
Credit card debt is a great example of this as it is climbing at an unprecedented rate. American households are feeling the strain of low/no income and increasing instability, and those debts are rising. But there is an answer—ways to get that debt partially or wholly forgiven.
Budget or Bust?
It’s not strictly a form of debt forgiveness, but if you’re struggling to pay your bills you can join your creditor’s hardship program. These programs are a little more accommodating right now and will help you restructure your debt and create a payment plan that suits your current and projected financial situation.
However, this should never be your first step. While helpful, hardship programs are not without their issues. If your payments are placed on hold, they will still accrue interest, and if your situation doesn’t improve, you’ll be much worse off several months down the line. It’s like patching a sinking ship with duct tape.
Your credit accounts will also be frozen, making it difficult to stay on top of escalating living costs.
Take a look at your incomings and outgoings. Free up some cash, and use that to repay some of your debts:
- Sell Unwanted Items: Old clothes, computers, video games, books, toys—it has never been easier to sell these things and secure some much-needed money.
- Cash Savings/Investments: When there’s a downpour, it’s time to tap that rainy-day fund and use it to improve your financial situation.
- Cancel Vacations: Everyone needs to get away, but is that vacation in the sun worth a decade of debt worry?
- Save on Utilities: Will your current provider allow you to withhold your next payment? Can you switch to save money?
- Cancel Unnecessary Subscriptions: $5 for a media subscription you never use, $30 for a gym you never visit—these things may seem minor, but they add up. The average American household grossly underestimates just how much they spend on monthly subscriptions and you could save well over $100 to go toward your debt.
Consolidate or Settle
Debt consolidation and settlement can be used to eliminate most debts and are particularly effective at clearing credit card debt.
Consolidation will literally “consolidate” your balances into one, which means you’ll only have one monthly payment to worry about and can greatly reduce your interest. If you have multiple types of debt, you can work with a debt management or debt consolidation company and they will do the hard work for you.
If you only have credit card debt, consider a balance transfer. Your balances will be moved onto a new card with a 0% intro APR. The money you save by avoiding interest can be used to repay more of your debt. The best-case scenario is that you clear the balance in full by the time the 0% intro rate ends, in which case you won’t have any more debt to worry about. If not, you can use that intro period as a much-needed reprieve.
As for debt settlement, your debts will be handled by a debt specialist. They’ll contact your creditors on your behalf and agree on a settlement amount. Your credit score will take a hit and it could take several years to repay all debts, but the best debt relief companies have been known to save up to 90% with credit card debt settlement.
The option that’s best for you will depend on your current financial situation, debt, whether or not you have any assets, and if you want a mortgage or car loan in the near future. Take a look at our guide on debt settlement vs consolidation to find the right solution.
More Info on Credit Card Forgiveness
PocketYourDollars is the web’s fastest-growing financial resource, covering credit card, personal loan, medical debt, and student loan forgiveness, as well as guides, tips, and strategies spanning everything from household bills and career options to car insurance and mortgages.
Take a look at these expert guides to improve your finances and prepare for a problem-free 2020.
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This content is brought to you by Mubashar Ali.
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