What is the Credit Card Forgiveness Act of 2010?

There are many advertisements exclaiming that the new credit card forgiveness act can reduce your debt in half. They blare out from the radio, TV and internet. This has left many people wondering: What is the credit card forgiveness act of 2010?

The credit card forgiveness act of 2010 is a program established by the federal government that will help you reduce your credit card debt if your current debt exceeds $10,000. There are many stipulations that you should be aware of when applying for this program, most of which is not clearly explained.

So, what is the credit card forgiveness act of 2010 exactly? It is a program that will provide you with a maximum of $5,000 debt forgiveness if you have double that amount of debt. The program maxes out at this amount, so if you have $20,000 worth of credit card debt you will not receive half off.

The only way to obtain this credit is to go through a debt settlement company. The benefits of this part of the plan are that these professional companies may be able to further reduce your debt above this government program. There is no government office or toll free number to call to receive this benefit; it can only be issued through a settlement company.

Another thing that you must understand is that this forgiven amount will be considered taxable income. At the end of the year you will be required to file a 1099-C form for additional income in the amount that you had reduced; it is now considered income. Many people will find themselves shocked when they receive the tax forms in the mail.

Another thing you must consider when inquiring about what the credit card forgiveness act of 2010 can do for you is the long term effects on your credit. It will be noted on your credit reports that you took part of the program. This will automatically reduce your credit score by approximately 100 points. This will remain on your report for 7 years and will affect your ability to get credit in the future.

For anyone needing debt relief, this can be a good plan for you. However, you must understand the “small print” of the deal before you sign up to use the service.