Banks advocating debt forgiveness? That’s a line you’d never expect to hear. But in an unusual move, banks have joined forces with consumer advocates to pitch a proposal to the government, where up to 40% of an individual’s credit card debt would be forgiven. The remainder could be repaid over several years at a favorable interest rate. Banks have came to the realization that it will be better to settle the debt for something, then get nothing.
Over 100 of the biggest financial institutions are behind the initiative. If approved, it would start as a pilot program involving as many as 50,000 Americans. The severity of an individual’s financial situation would determine the percentage of the debt to be forgiven.