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When you are drowning in debt it often feels like there is no solution to your problems. Do not despair. You may discover that your lenders have a policy of credit card debt forgiveness.

What does this mean? When you have a credit facility in place, you will owe a certain sum of money made up of what you originally borrowed or spent, interest and other fees. If you fall behind in your contractual payments, the company will generally charge you a late payment charge. They may even increase the rate of interest you are paying. The result is that you can find your debts growing at an extremely swift rate.

Various companies will accept a lower amount than you have a loan from in settlement of the account. So if your statement shows an outstanding balance of $6,000, they may let you pay $4,500 and close the account without taking any further action to claim the balance. If you do negotiate a resolution like this, you should request the company to confirm in writing that they're accepting it on a "full and final" basis and that they will not seek to recover any more money in relation to this debt in the future.

You do need to be aware that if they accept a lesser amount and the difference between what you owed and what you paid was $600 or more, you must declare the figure on your tax return. You might be responsible to tax on this figure as the IRS may treat it as additional income. Whether they do or not will depend on your personal circumstances, your income, deductions and overall economic situation.

You also should know that if your lenders accept reduced amounts, your credit evidence may be adversely affected. This can make it very tricky for you to obtain new borrowing facilities in the future.

So before you take any action you should make sure that credit card debt forgiveness is the right route for you. It could at first seem like the easy way out but things usually are not always as they first seem. It appears obvious but the best way to get out of debt is to try to raise the cash to repay your debts in full either by selling assets or working additional hours. This isn't always possible.

It is imperative that you compile an economic budget which proves that you can afford to pay any resolution figures offered while simultaneously ensuring that you are not swopping a debt for a tax bill and a damaged credit rating!

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