When you are at the end of your reins as your debts keep growing and your income doesn’t, you might grasp at anyone who offers you a solution that could help. That’s where debt forgiveness comes in.
Debt forgiveness is when a lender forgives part or all your outstanding balance on a loan or some other credit account. Sound too good to be true? Well, there are some caveats to it that you need to be aware of.
Read on to see what debt forgiveness in 2021 is all about, and how you can get your student loan or credit card debt forgiven.
Debt Forgiveness Program – What Is It All About?
In the past, debt forgiveness programs used to be quite ubiquitous and they helped people walk away from hundreds or thousands of dollars of debt easily and effectively.
But nowadays these programs are much more stringent.
The great thing about debt forgiveness is that there are still many special programs available that can help you wipe out some or ALL your debt in one easy swipe.
The even better thing about debt forgiveness programs is that your credit score remains intact and unchanged. That’s what makes these debt forgiveness programs so enticing.
That’s where you need to amp up your alertness. There are many shady debt forgiveness scams out there that promise to get rid of your debt forever but are just going to cost you money and ruin your credit score.
Stay away from them. Do your due diligence, and remember that if it sounds too good to be true, it probably is!
Student Debt Forgiveness
if you are struggling to pay your federal student loan debt, then these programs are made for you. There are many different kinds of student debt forgiveness programs out there.
Public Service Loan Forgiveness (PSLF)
One of them is the Public Service Loan Forgiveness (PSLF) program. This program forgives your student loan balance if you have made 120 qualifying monthly payments under a qualifying repayment plan.
Not only that, but you have to be working full-time for a qualifying employer. Sounds strict, right? But it’s so worth it if you can weather the 10 years of payments and all the requirements.
Income-Based Repayment (IBR)
The second one to be cognizant of is the Income-Based Repayment (IBR) plan. If you aren’t making enough money each month to pay off your federal student loans, then you can use this plan to reduce your monthly payments.
They will reduce your monthly payments to 10-15% of your discretionary income and increase your repayment period to 20-25 years. Of course, there are some downsides to this.
Even though you might be pleased that you have to pay a smaller amount every month, it does mean that you end up paying a LOT more in interest over the complete repayment plan.
Also, your leftover federal student loan debt at the end of the repayment period will be forgiven, i.e., after 25 years. But you will be taxed on the amount forgiven at the end of your repayment period.
That could end up being a huge chunk depending on how much taxes were forgiven. Thus, think through all your options before taking on IBR.
Credit Card Debt Forgiveness
The thing with credit card companies is that they are a cut-throat business and thus, they never forgive credit card debt. Or they rarely do.
But you could potentially settle the debt for less by paying a smaller amount in settlement of the balance and getting the rest forgiven.
Again, this is something that you would need to discuss with your credit card companies. If you are desperate and running late on payments, then they would be obliged to listen to you if you have an alternative plan in mind.
That’s why you need to speak to a debt relief specialist beforehand, so they can have that conversation with the credit card companies on your behalf.
Remember that credit card companies have a lot more experience dealing with people like you than you do with them. You need someone on your side who has decades of experience as well. That will even things out!
IRS Debt Forgiveness
Whenever you think of the IRS, chills might run up and down your spine, especially if you owe a huge tax bill.
If you are having a hard time paying your IRS debt, there are debt forgiveness programs called an Offer in Compromise, which allows you to pay part of what your tax bill might be.
The IRS will consider all your facts and circumstances, like your income, expenses, assets, and ability to pay equally, and then make a judgment on whether you qualify for the debt forgiveness program.
With this program, you can choose to pay a lump sum or periodic payments. But you cannot qualify for it if you are in an open bankruptcy proceeding.
Again, as with all debt forgiveness programs, evaluate your options clearly. Take your time with these decisions, as once you are in a debt forgiveness program, you are stuck in it for quite a while.
Not only that, but you don’t want to jump into something thinking that it’s the best thing since sliced bread, and realize that in fact, you end up paying more in the long-term.
Always bring in an expert debt relief specialist and speak to them about all your options first. Remember that this is your first stab at this, but they have been doing this day in and day out for years and decades now.
Debt Forgiveness in 2021 Is Quite a Different Gambit
Debt forgiveness has changed quite a lot since your parent’s generation, and it’s time for you to realize that you might need some help on your side to get the best debt forgiveness program for you.
Contact Alleviate Financial Solutions for proven results – they have helped over 20,000 families to get debt relief and achieve financial freedom. Do you want to be the next one they help?