How to know when credit card debt forgiveness is the wrong call (and what to do instead)

MoneyWatch: Managing Your Money How to know when credit card debt forgiveness is the wrong call (and what to do instead) We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. .chip { background-image: url('/fly/bundles/cbsnewscore/images/chip-bgd/chip-bgd-moneywatch.jpg'); } By Angelica Leicht Angelica Leicht Senior Editor, Managing Your Money Angelica Leicht is the senior editor for the Managing Your Money section for CBSNews.com, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications. Read Full Bio Angelica Leicht May 4, 2026 / 11:46 AM EDT / CBS News Add CBS News on Google There are situations in which debt forgiveness is the right call, but it isn't a one-size-fits-all answer for borrowers. J Studios/Getty Images Borrowers have been racking up credit card debt at a surprisingly rapid pace recently, and it's causing major issues for many people's budgets. Not only do borrowers hold a record $1.23 trillion in credit card debt right now, but nearly half of cardholders carry a balance from month to month, according to a recent analysis of consumer credit data by The Century Foundation, meaning that their balances are accruing compound interest at today's high rates. Against this backdrop, the idea of pursuing debt forgiveness has become an increasingly popular one. The goal of this approach is to negotiate with your creditors to pay a fraction of what's owed. The account is then closed, and you move on with your financial life. And, for borrowers who are deep in debt with no realistic path to repayment, it can genuinely be the right call. But credit card debt forgiveness — also known as debt settlement — isn't a one-size-fits-all answer. While it can reduce what you owe, it also comes with tradeoffs that can ultimately leave you in a more comp...