Up to 40% of credit card debt to be forgiven?

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.

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Credit card companies are the only business that works towards bankrupting their customers.They must be regulared. I’m not afraid of regulation, for companies regulate me all the time, and mostly not for my good.

The banks and credit card company’s are in trouble because they charge such outstanding percentages that people are naturally going to have trouble paying. I say they should forgive at least %40 of the credit card debt. They’ve made their money ten times over on high interest rates and fees.

Like other houses of cards in the world of finance consumer debt is ready to collapse. So many are doing debt settlement now and the banks are seeing that there’s just no way many can repay what they have borrowed especially at high interest rates. I am personally doing debt settlement, but beware of scams if you do.

When is this pilot program to be started? Is it up to Congress? Then it won’t be till 2009. Some of us cannot hang waiting.

With that first graph it’s unusual to see that credit card defaults were higher in ’02 and ’91-92 than it is today.