0% APR

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The decision whether to seek debt forgiveness can have serious consequences for taxes and credit standing. This article is not intended as legal advice for your specific circumstances and does not create an attorney-client relationship with Lexington Law.

Debt forgiveness occurs when a lender forgives either a portion of or the entire debt owed by a borrower from a loan or credit account.

Debt forgiveness occurs when a portion of a loan or the entire remaining amount of a loan or credit line is canceled, relieving the borrower from the obligation of repayment. Before moving forward with debt forgiveness, it’s important to consider the potential benefits and drawbacks so that you’re fully prepared.

It’s also important to note that debt forgiveness differs from debt relief, which involves reorganizing debt to facilitate repayment—but doesn’t cancel the debt.

Continue reading to learn more about debt forgiveness and explore different options that you may qualify for.

Debt forgiveness benefits

Debt forgiveness can provide relief to those who are struggling to make payments, and it has the following benefits:

  • You can avoid filing for bankruptcy: Debt forgiveness can prevent the need to file for bankruptcy, which would severely damage your credit for up to seven to 10 years.
  • You can pay less than your original obligation: While the amount you’ll pay varies depending on the program you choose, it is typically much less than the amount you originally owed.
  • You can pay your debts quicker: Through debt forgiveness, you can significantly reduce your debt in a much shorter time frame than you initially expected.

Debt forgiveness drawbacks

On the other hand, debt forgiveness has the following downsides that you should be aware of:

  • You may owe taxes on the amount that’s forgiven: In general, canceled debt is considered taxable income that you may be responsible to cover.
  • You could owe more than your original obligation: Many debt relief companies charge excessive fees that could equal or exceed the amount you originally owed. Additionally, it’s important to change your financial habits so you don’t continue to rack up debt.
  • Your credit may take a hit: Depending on the type of debt that’s forgiven, you could notice a negative effect on your credit. However, this will likely not be the case if the debt in question is student loans or medical bills.

Because of these drawbacks, you may want to consider other debt management options.

Debt forgiveness vs. debt consolidation

An alternative to debt forgiveness that you may want to consider is debt consolidation. While this method doesn’t cancel the debt, it can help you pay it off faster and accrue fewer interest charges.

One of the most common debt consolidation methods is a balance transfer, which involves moving debt to a new credit card that offers 0% APR for a few months. During this time, you can work to pay off your debt without racking up interest.

Other options include taking out a personal loan or home equity loan to pay off your debt. The strategy here is that your new loan would have a lower rate than that of your current debt, allowing you to save on interest

Just be wary of for-profit companies that promise debt relief via consolidation, as they’re often pricey. Instead, look to nonprofits such as the National Foundation for Credit Counseling.

How to get debt forgiveness

If you’re moving forward with debt forgiveness, you have a few options depending on loan type and your overall personal and financial situation.

Federal programs

One of the few ways to get true debt forgiveness without consequences is to see if you’re eligible for a special program. Typically, these are only offered for student loan debt and home mortgages:

  • Student loan forgiveness: In mid-2023, student loans totaled $1.7 trillion. To help alleviate this, the Public Service Loan Forgiveness (PSLF) program provides Direct Loan forgiveness for full-time workers of U.S.-based or non-profit organizations who have made 120 qualified monthly payments. Another type of student loan forgiveness is income-driven repayment plans, which forgive the remaining loan balance at the end of a repayment period. Thirdly, if you’re a teacher, you may be eligible for a Teacher Loan Forgiveness program.
  • Mortgage debt forgiveness: The Mortgage Forgiveness and Debt Relief Act, enacted in 2007, lets eligible borrowers exclude up to two million dollars in forgiven mortgage debt from their taxable income. This allows forgiven mortgage debt and foreclosure balances to be truly penalty-free.

You may be eligible for other federal programs to help manage debt. To explore your options further, the Federal Trade Commission has guidelines for getting out of debt.

Settlement

Settlement is by far the most common form of debt forgiveness. It’s the process of negotiating your debt to only repay a portion of your outstanding balance. The rest is forgiven, meaning repayment is not necessary.

Borrowers tend to choose debt settlement if they can’t afford expensive and persistent debt payments. They may also choose this route as an alternative to declaring bankruptcy, since debt settlement should only stay on your credit report for seven years.

However, it’s important to watch out for hefty fees from these companies. If hiring a debt settlement agent is beyond your means, keep in mind that negotiating on your own is an option. First, you’ll need to determine your outstanding balance and what monthly payment you can afford. Next, contact your creditor. You’ll need to explain why you can no longer afford the loan and then negotiate a lump sum. If they agree, ask for a written letter so you have legal proof of the settlement.

Statute of limitations

If you’re seeking debt forgiveness for credit card debt, you may be able to leverage the statute of limitations (SOL) in your state. The SOL is applicable once a certain amount of time has passed (typically three to 15 years depending on what state you live in) and your debt collector hasn’t pursued debt collection in court. After this time frame, they have no legal claim to your money, and they should no longer be able to successfully sue you to collect the debt. However, this approach is risky for a number of reasons.

SOL start to accrue after the date of last activity, which includes payments and charges. After your SOL expires, a lawsuit can still be filed against you—but you can use the SOL as a defense in court.

Bankruptcy

Filing for bankruptcy is an option and that decision will remain on your credit report from seven to ten years. That said, it may help forgive some of your debt.

If you file for Chapter 7 bankruptcy, your debt is forgiven and some of your assets remain with you subject to certain state and federal exemptions.

If you file for Chapter 13 bankruptcy, you’re still required to pay off your debts. However, the court will assign you a payment plan spanning anywhere from three to five years, and they may reduce your outstanding balance to lessen the financial burden.

What are the consequences of debt forgiveness?

After you have a portion of your debt forgiven, you may feel like you’re out of the woods—and for the most part, that’s true. However, there are a few circumstances you’ll need to be aware of so that you’re prepared for the effects debt forgiveness may have on your finances.

Taxes

No matter which debt forgiveness route you take (with the exception of bankruptcy), you’ll likely end up with a higher taxable income. If the amount of forgiven debt exceeds $600, you’ll receive a 1099-C form titled “Cancellation of Debt” from the creditor.

With this form, you report the amount of your forgiven debt to the IRS and pay income tax on it. When you first take out a loan or borrow money, you’re not charged taxes on it because there’s the assumption that you’ll pay it back. But after debt forgiveness, that assumption no longer applies, which is why this essentially “free money” is now considered taxable income.

The upside is that the income tax you owe on the forgiven debt amount is less than what you would have to pay if you still owed the debt. Make sure to plan for this expense so that it doesn’t surprise you, especially if the forgiven amount is sizable.

Consider contacting a qualified tax professional for help accurately filing your taxes. Then, once you properly report your debt forgiveness to the IRS, you’ll want to check your credit report.

Credit score

The unfortunate reality is that debt forgiveness may negatively affect your credit score. Of course, there is no way to say for sure. What will improve is your debt to income ratio.  The effect to which debt forgiveness impacts your credit largely depends on how you choose to seek debt forgiveness.

Bankruptcy can be the most devastating option for your credit score. According to Debt.org, a FICO score of 780 could take a 240-point dip, and a score of 680 could take a hit of 130 – 150 points. If your credit score is much lower than 680, you may not see as large of a dip. However, if you have no late payments or charge off on your credit report prior to filing bankruptcy, your score dip is far less.

Debt forgiveness provides a much-needed solution for borrowers struggling to make payments. However, it also comes with conditions. When considering which debt management plan is right for you, a little careful planning can go a long way.

If overwhelming debt has caused your credit to dip below where you’d like it to be, see if we could help. We can take a look at your credit report and assist you with moving forward.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Reviewed By

Nature Lewis

Associate Attorney

Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.

Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!

Source: lexingtonlaw.com

Apache is functioning normally

Apache is functioning normally

On a day when mortgage rates are officially close to hitting 8%, I decided to write a post about why they might be a lot lower in 2024.

Call me a contrarian. Or an optimist. Or perhaps just an individual that is looking at data and drawing some conclusions.

While the trend for mortgage rates lately has undoubtedly been higher, higher, higher, we could be close to hitting a peak. I know, I’ve said that before…so much for the mortgage rate plunge.

But maybe we just need to cross that psychological 8% threshold before things can turnaround.

Sometimes you need to see/experience the worst before a recovery can take place.

Here Come the 8% Mortgage Rates…

The threat of 8% mortgage rates might last longer than the 8% mortgage rates themselves, assuming they actually materialize.

This isn’t a new threat. I wrote all the way back in September 2022 to watch out for 8% mortgage rates. At that time, we inched closer to those levels before rates pulled back.

More recently, Shark Tank’s Mr. Wonderful called for the same, arguing that the Fed wasn’t messing around when it came to its inflation fight.

And now it appears he might be right, with the 30-year fixed averaging 7.92%, at least by MND’s daily survey.

But despite higher and higher mortgage rates over the past month and a half, the Fed has become more and more dovish.

There have countless comments of late from Fed speakers essentially signaling a pause in rate hikes. Basically arguing that no further tightening is necessary.

That doesn’t mean 10-year bond yields can’t keep rising, nor does it mean mortgage rates can’t also increase.

While the Fed is saying one thing, everyone else is looking at the data, which continues to come in hotter than expected.

About 10 days ago, it was a big jobs report print, and today it was retail sales coming in much higher than forecast.

Per the Commerce Department, retail sales increased 0.7% in September, more than double the 0.3% Dow Jones estimate.

This has pushed the odds of another Fed rate hike up for the December meeting to near parity with a pause.

Per the CME FedWatch Tool, chances of a rate hike at the December 13th meeting are now at 41.9%. That’s up from 32.7% yesterday and 25% a week ago.

Should We Listen to the Fed or the Data?

It’s been a strange contrast lately, with the Fed becoming more dovish as hot data continues to come down the pipe.

But ultimately it appears as if the interest rate traders are more focused on the data than they are what Fed speakers have to say.

Even so, the odds remain ever so slightly in favor of a pause, which is good news for the time being.

Of course, those numbers can change quickly, as evidenced in the daily and weekly movement highlighted above.

And if consumers keep spending, despite economic headwinds and higher prices, it might be difficult to see the cooler economic reports the Fed wants.

However, the Fed may still stand pat at these levels and wait for conditions to deteriorate, as would be expected after 11 rate hikes.

Today, Richmond Fed President Thomas Barkin said the hot data “doesn’t match with his on-the-ground observations that demand seems to be slowing.”

So perhaps we just need more time to let the restrictive monetary policy do its thing. It’s not as if consumers immediately stop spending just because costs are higher.

People still need to buy things, especially gas, groceries, clothing, and other essentials.

And thanks to all the credit floating around, whether it’s 0% APR credits cards or buy now, pay later platforms, the party can continue for a lot longer.

The 10-Year Yield Is Forecast to Fall in 2024, Pushing Mortgage Rates Down with It

At last glance, the 10-year bond yield, which tracks 30-year fixed mortgage rates pretty well, was a sky-high 4.86%.

Meanwhile, the mortgage rate spread was over 300 basis points, when it’s typically closer to 170.

Combined, that means a yield of 5% would signal 8% mortgage rates. In normal times, it would translate to a rate of say 6.75%. But these are not normal times.

Mortgage rates keep rising and mortgage lenders continue to price defensively as the threat of more inflation and Fed rate hikes remains.

But maybe, just maybe, we are approaching the worst of it, as consumers teeter on the brink of a possible recession.

And perhaps 8% mortgage rates will signal a peak and possible turning point.

After all, the 10-year treasury yield is expected to fall to 3.41% by April 2024, per a September 27th note from Statista.

Meanwhile, Capital Economics market economist Hubert de Barochez predicts the 10-year yield will fall about 80 basis points by the end of the year thanks to slowing growth and the possibility of a mild recession.

De Barochez says this would allow the Fed to cut rates sooner, ideally leading to lower mortgage rates in the process.

Yes, such forecasts are subject to change (or can be completely wrong), but the general consensus is that we’ll be lower by mid-2024 or earlier. Just maybe not that low.

If we take a lower 10-year yield and sprinkle in a more traditional mortgage rate spread, say just 200 basis points, that puts mortgage rates back in the 6% range.

Mortgage rates in the 6s, or even high-5s if paying discount points at closing, would usher in some normalcy to the housing market.

If accompanied by a mild recession and some job losses, it could also mean slightly lower home prices as well, instead of a return to bidding wars.

And that could be good for the long-term health of the housing market, which is clearly broken right now.

(photo: Eli Duke)

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

There is a sinking feeling in your gut that comes with credit card debt, especially when it starts to feel unmanageable. While negotiating a credit card settlement might not sound like a fun solution, there are scenarios when it may make sense. Let’s dive in.

The Difference Between Secured and Unsecured Debt

First, let’s talk about the type of debt a credit card typically is. When a credit card company issues a credit card, it’s taking a big chance on getting its money back, plus interest. It’s more than likely that the credit card you have is considered “unsecured.”

All that means is that it isn’t connected to any of your assets that a credit card company can seize in the event that you default on your payments. Essentially, the credit card company is taking your word for it that you are going to come through with the monthly payments.

Secured debt works a bit differently. They’re backed by an asset, like your car or home. If you default on a secured debt, your lender could seize the asset and sell it to pay off your debt. Mortgages and auto loans are two common types of secured debt.
💡 Quick Tip: With lower fixed interest rates on loans of $5K to $100K, a SoFi personal loan for credit card debt can substantially decrease your monthly bills.

Credit Card Debt Negotiation Steps

The process of negotiating credit card debt usually begins when you have multiple late or skipped payments — not just one. A good first step is to find out exactly how much you owe, and then research the different options that may be available to you. Examples include a payment plan, an increase in loan terms or lowered interest rates.

Once you have that information, you’re ready to negotiate. You can start by calling your credit card company and asking for the debt settlement department. Or, you can send a note by email or regular mail.

You may have to go through a number of customer service reps and managers before striking a deal, but taking the initiative can show creditors that you are handling the situation honestly and doing what you need to do.

When you do reach an agreement, be sure to get the agreed-upon terms in writing.

Types of Credit Card Debt Settlements

Lump Sum Settlement

This type of agreement is perhaps the most obvious option. Essentially, it involves paying cash and instantly getting out of credit card debt. With a lump sum settlement, you pay an agreed-upon amount, and then get forgiveness for the rest of the debt you owe.

There is no guarantee as to what lump sum the credit card company might go for, but being open and upfront about your situation could help your cause.

Workout Agreement

This type of debt settlement offers a degree of flexibility. You may be able negotiate a lower interest rate or waive interest for a certain period of time. Or, you can talk to your credit card issuer about reducing your minimum payment or waiving late fees.

Hardship Agreement

Also known as a forbearance program, this type of agreement could be a good option to pursue if your financial issues are temporary, such as the loss of a job.

Different options are usually offered in a hardship agreement. Examples include lowering interest rate, removing late fees, reducing minimum payment, or even skipping a few payments.

Why a Credit Card Settlement May Not Be Your Best Option

Watching your credit card balance grow each month can be scary. Depending on your circumstances, a settlement may be the best solution for you.

However, it’s not without its drawbacks. For starters, a settlement may result in your credit card privileges being cut off and your account frozen until a settlement agreement is reached between you and the credit card company.

Your credit score could take a hit, too. This is because your debt obligations are reported to the credit bureaus on a monthly basis. If you aren’t making your payments in full, this will be noted by the credit bureaus.

That said, by negotiating a credit card settlement, you may be able to avoid bankruptcy and give the credit card company a chance to recoup some of its losses. This could stand in your favor when it comes to rebuilding your credit and getting solvent again.

Solutions Beyond Credit Card Debt Settlements

Personal Loan

Consolidating all of your high-interest credit cards into one low-interest unsecured personal loan with a fixed monthly payment can help you get on a path to pay off the credit card debt. Keep in mind that getting a personal loan still means managing monthly debt payments. It requires the borrower to diligently pay off the loan without missing payments on a set schedule, with a firm end date.

For this reason, a personal loan is known as closed-end credit. A credit card, on the other hand, is considered open-end credit, because it allows you to continue to charge debt (up to the credit limit) on a rolling basis, with no payoff date to work towards.
💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

Transferring Balances

Essentially, a balance transfer is paying one credit card off with another. Most credit cards won’t let you use another card to make your payments, especially if it’s from the same lender. If your credit is in good shape, you can apply for a balance transfer credit card to pay down debt without high interest charges.

Many balance transfer credit cards offer an introductory 0% APR, but keep in mind that a sweet deal like that usually only lasts about six to 18 months. After that introductory rate expires, the interest rate can jump back to a scary level — and other terms, conditions, and balance transfer fees may also apply.

Credit Consumer Counseling Services

Credit consumer counseling services often take a more holistic approach to debt management. You’ll work with a trained credit counselor to develop a plan to manage your debt. Typically, the counselor doesn’t negotiate a reduction in debts owed. However, they may be able to have your loan terms increased or interest rates lowered, which would lower your monthly payments.

A credit counselor can also help you create a budget, offer guidance on your money and debts, provide workshops or educational materials, and more.

Many credit counseling agencies are nonprofit and offer counseling services for free or at a low cost. You can search this list of nonprofit agencies that have been certified by the Justice Department.

The Takeaway

When credit card debt starts to become unmanageable, negotiating a credit card debt settlement may be an option to consider. There are different types of settlement options to consider. Understanding what’s available to you — and what makes sense for your financial situation and needs — can help you make an informed decision. If a settlement isn’t right for you, there are other solutions, such as a personal loan or credit counseling services, that may be a better fit.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

Apache is functioning normally

Apache is functioning normally

According to the Federal Reserve, consumer debt in the United States in the second quarter of 2021 totaled more than $4.2 billion. So if you’re struggling with debt, you’re definitely not alone. If you’re looking for a way to dig yourself out of debt, a debt consolidation loan could help.

But what is a debt consolidation loan? Find out if it’s the right option for you by learning more about it, including pros and cons. You’ll also find information about other alternatives.

In This Piece

What Is Debt Consolidation?

Debt consolidation occurs when you bring multiple existing debts under a single umbrella. This usually means you use some type of credit or other financial tool to convert multiple debts into a single debt. Debt consolidation loans are one of the most popular ways to consolidate debt.

What Is a Debt Consolidation Loan?

A debt consolidation loan consolidates, or combines, your various debts under a single account.

Pros of Debt Consolidation Loans Cons of Debt Consolidation Loans
Potentially lower interest rates, especially if you now have the credit score to consolidate high-interest loans under better terms

May require good credit to obtain or get a good rate
A single payment, making it easier to manage your finances Might leave paid-off credit card and other revolving accounts open, creating an opportunity to run up even more debt than you started with
Your debt possibly spreading out over a greater amount of time, making each monthly payment more affordable Could potentially temporarily impact your credit score if it involves closing a lot of other accounts

What’s the Difference Between Debt Consolidation and a Personal Loan?

A personal loan is an unsecured loan that you can use for just about anything. In some cases, you could use the funds from a personal loan to consolidate some debts, making it a debt consolidation loan.

However, a loan specifically for the purpose of debt consolidation may be handled a bit differently. For example, in some cases, the lender may not pay the money directly to you. They might pay off your debts directly instead.

Alternatives to Debt Consolidation Loans

Your options depend on your credit, existing assets, and how much debt you want to consolidate. Some alternatives to debt consolidation loans are highlighted below.

1. Refinance Your Mortgage If You Have Equity

If you have equity in your home, you can refinance it or take out a home equity line of credit, or HELOC. These options give you cash you can use to pay down debt.

Pros of Refinancing a Mortgage to Consolidate Debt Cons of Refinancing a Mortgage to Consolidate Debt

Home equity loans and HELOCs tend to have much lower interest rates than personal loans and credit cards

You use your home as collateral for the debt, which means if you don’t pay it, the lender has a claim on your house
You may be able to deduct interest on home loans to reduce tax burdens Variable-rate loans could come with increased interest in the future
The total number of payments you need to manage each month is substantially reduced Credit cards you pay off could be run up again, leaving you with more debt than you started with
You’re less likely to forget to pay a debt related to your home  

Tip: Don’t pocket the money that refinancing frees up every month. Instead, use it to create an emergency fund. Once that’s set up, use the money as prepayment against your home loan or to boost retirement savings.

2. Use a Balance Transfer Card

Apply for a balance transfer card if your credit is in good shape, or call a card provider to ask if they’d be interested in offering you a balance transfer option on an existing card. This lets you transfer higher-interest credit card debt to a card with lower interest rates. Some balance transfer cards offer 0% APR for six to eighteen months on balance transfers for new account holders.

Pros of Balance Transfer Cards for Debt Consolidation Cons of Balance Transfer Cards for Debt Consolidation

Can substantially reduce the cost of credit card debt

Balance transfers usually come with fees of 3% to 5%—still less than your typical interest costs might be on high-interest credit card debt, but something to keep in mind
Makes it easier to pay off credit card debt It can be tempting to use your old credit cards again, running up more debt and ending up with double the debt you started with
Might let you consolidate multiple cards into a single account for easier management If you don’t pay off the debt in the introductory period, you could end up with expensive interest fees

Tip: Keep your old credit card accounts open for extra benefits to your credit score. It helps your credit utilization rates and credit age. But avoid using those accounts unless you have the money to pay them immediately.

3. Borrow from Retirement Savings

If you have retirement savings, you might be able to borrow from it to pay off debt. Remember, though, that you’ll need that money later. Only consider this option if you can pay back the money quickly so you don’t lose time building your retirement funds.

Pros of Borrowing From Retirement Savings for Debt Consolidation Cons of Borrowing From Retirement Savings for Debt Consolidation

Doesn’t require a credit check, so you don’t need a healthy credit file

You might owe taxes and penalties on the money if you withdraw early from your retirement
Interest rates are low, and you’re actually paying it back to your own account You can borrow against some employer-sponsored retirement plans, but debt consolidation might not be an allowed reason
  You could reduce how much money you have in retirement, especially if you can’t pay back the money

Tip: Consider this option as a last resort loan or if you have some money coming in soon, such as from a tax return. If you can pay the money back within a month or two, you don’t have as much to lose.

4. Ask a Friend or Relative for a Loan

If you know someone who has some extra money, it might be worth asking them for a loan at a low interest rate. You can use the money to pay off your debts and make one monthly payment to the person in question.

Pros of Asking Someone for a Loan for Debt Consolidation Cons of Asking Someone for a Loan for Debt Consolidation

No credit check or requirements

If you blow it, you might ruin an important relationship
Your family member or friend can earn some interest The IRS can be a real pain when it comes to family loans, so consult a tax professional
  Loan payments won’t be reported to your credit reports or potentially help your score

Tip: Treat the transaction as you would with a bank or other lender. Put everything in writing, agree to fees or penalties if you miss payments, and strive to make timely payments.

5. Try Debt Counseling

Debt or credit counseling with a reputable organization can help you create a viable personal budget and potentially negotiate with creditors for better terms. Debt counselors may help you understand how to better manage your income and expenses and leverage debt payoff strategies to get out from under your debt.

Pros of Debt Counseling Cons of Debt Counseling

Can provide you with some tools to better manage debt

May not reduce the overall cost of your debt
May help you see solutions that you didn’t see before May rely on you making personal sacrifices in your budget
Helps you pay off debt with your own resources, which can be satisfying If you don’t work with a reputable organization, you might be scammed out of large fees with promises that the company can’t keep

Tip: Don’t work with debt counseling companies that offer 100% guarantees to reduce or wipe out your debt or that charge excessive fees. These are red flags that could point to scams.

6. Enter a Creditor Assistance Program

Many creditors have assistance programs to help account holders who are experiencing financial distress due to sudden loss of income or an emergency. These programs range from mortgage modifications, which might reduce your interest rate or total monthly payment, to skipping a single payment and having it added onto the end of the loan penalty-free.

Pros of Creditor Assistance Program Cons of Creditor Assistance Programs

May not require good credit, especially if you have a solid payment history with the creditor

Aren’t always available
Could offer a fast, convenient solution to short-term cashflow issues You can typically only take advantage of these tools once or once every so often

Tip: Anytime you’re experiencing financial distress or might be late with a payment, don’t ignore the issue. Call your creditor to find out what they might be able to do to help.

7. Bankruptcy

Bankruptcy is a last-resort option that can help you discharge or restructure your debts and make a new start in a few years.

Pros of Bankruptcy Cons of Bankruptcy

If successful, you can have all or many of your debts discharged

Bankruptcy can be a long and stressful process
You may be able to keep certain assets, such as your home or car It can dramatically impact your credit in the short term
Filing for bankruptcy establishes an automatic stay, so creditors can’t continue to attempt to collect or foreclose unless the bankruptcy is dismissed Depending on what type of bankruptcy you file, you may not be able to get credit for a while

Tip: Talk to a bankruptcy attorney about this option before you take action. Most provide free consultations to help you understand if bankruptcy is a good choice for you.

The Bottom Line on Debt Consolidation

If you’re struggling with debt, you’re not alone. And you do have options. Look into a debt consolidation loan or one of the options above to start working on financial stability for the future.

Source: credit.com

Apache is functioning normally

Apache is functioning normally

Advertiser Disclosure: Credit.com has partnered with CardRatings for our coverage of credit card products. Credit.com and CardRatings may receive a commission from card issuers.

Editorial Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

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Full Review of Capital One Quicksilver Student Cash Rewards Credit Card

This card is a great choice for students who may not have any credit built up yet but are looking to get in on cash back rewards. Just a heads up: this card is exclusive to students. So if you’re enrolled in a university, a community college or another post-secondary education institution and want to work on building credit while earning some sweet cash back rewards, this card may be right for you. (This is especially true if you’re planning on Ubering around campus or getting delivery through Uber Eats.)

There are quite a few credit card options available in the student credit card market that offer rewards, good interest rates, and low fees for students with low to non-existent credit who are just starting out. There are a few reasons why we like the card_name (in general, Capital One has great card offers), and a few things to consider before applying. Let’s get into it.

What You’ll Like About This Card

Unlimited 1.5% Cash Back

You can earn 1.5% cash back on your everyday purchases with no limits. Other cash back rewards may offer higher, variable cash back rates on unique purchases, but the Capital One Quicksilver Student Cash Rewards Credit Card is simple, direct, uncomplicated. It also allows you the flexibility to redeem your rewards as cash back, gift cards, or statement credits.

10% Cash Back on Uber Eats

Now through November 2024, you can earn even more by using your card to pay for Uber orders. Spend $50 on Uber or Uber Eats every week for a year, for example, and you can end up with an $260 extra as long as you’re paying off your card every month.

Free Uber One Membership

Another way this card helps you save money is that it covers your Uber One membership through November 2024.

Sound good? Learn more about applying for a Capital One Quicksilver Student Cash Rewards Credit Card

The Drawbacks

No Introductory APR Offer

Cards that come with an introductory 0% APR make it possible to make larger purchases initially and pay them off over time without incurring interest. (If you’re a student, that 0% APR may come in handy when buying books or materials for school). However, this card doesn’t have an introductory 0% APR offer.

Potentially High APR

Depending on your approval status, the APR on your card might be relatively high. It’s not a big deal if you regularly pay off your balance, but you might want to shop around to see if you can get a better rate, especially if you have decent credit already.

How Does It Compare to Other Student Credit Cards?

Revvi Visa® Credit Card
Intro APR: None Intro APR: None Intro APR: None
Ongoing APR: reg_apr,reg_apr_type based on creditworthiness Ongoing APR: reg_apr,reg_apr_type based on creditworthiness Ongoing APR: 35.99% Fixed
Balance Transfer: None Balance Transfer: None Balance Transfer: None
Annual Fee: annual_fees Annual Fee: annual_fees Annual Fee: $75 first year, then $48 after
Credit Needed: Scores in the credit_score_needed range Credit Needed: Scores in the credit_score_needed range Credit Needed: Scores in the poor – bad range

Is It Worth It?

For students looking to build credit, the Capital One Quicksilver Student Cash Rewards Card can be a good option. If you already spend a decent amount with Uber, you can rack up cash back quickly now through November 2024. Then, you can use that cash to cover books or other necessary expenses or splurge on something fun like a concert or weekend trip.

Are you ready to maximize your credit rewards?

Frequently Asked Questions

What are the credit limits for the Capital One Quicksilver Student Cash Rewards Credit Card (minimum and maximum)?

The credit limit you’re approved for depends on your credit history and ability to pay back any balances. That being said, users of the Capital One Quicksilver Student Cash Rewards Credit Card can likely expect credit limits from a few hundred to a thousand dollars or so.

How soon can I increase my credit limit after being approved for a Capital One Quicksilver Student Cash Rewards Credit Card?

Credit card providers are often willing to increase your credit limit after a period of time in which you have demonstrated on-time payments and responsible credit management.

How good is a Capital One Quicksilver Student Cash Rewards Credit Card for building credit?

This is a decent credit-building card for someone (like a student) just starting to build their credit. Capital One also regularly reports to credit bureaus, so your timely payments will be noted and can help you build credit.

See Rates and Fees

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Source: credit.com