Disabled individuals can often negotiate card debt forgiveness because the combination of extra medical bills and lost income creates a believable financial hardship.
Issuing banks are most willing to grant partial debt relief when it represents the best deal they can strike. You have two levers that you must pull simultaneously.
The first lever is the carrot. You can entice the bank into a settlement by offering immediate partial payment. But you need a source of funding.
The second lever is the stick. You must create fear that the bank will get nothing if they turn down the settlement offer, and debt collection rules help tremendously.
Disability Debt Forgiveness
Credit card debt forgiveness works well when the disabled individual can pull the first lever: set aside enough money to make a reasonable settlement offer. The issuing bank agrees to excuse most of the balance owed because they get something immediately instead of nothing.
Find pertinent programs to raise the necessary funding.
Disabled Seniors
Credit card debt forgiveness is within reach of disabled seniors who learn to navigate the many government benefit programs available to older adults. The extra cash and reduced expenses can help the elderly save enough dough to make a sizable settlement offer.
Free government benefits, not loans, retire debts. Disabled seniors must be diligent and apply for every program that might help reduce expenses or bring in extra cash, as many could help.
Disabled Veterans
Credit card debt forgiveness is possible for disabled veterans who capitalize on the many government benefits for former armed forces members: Army, Navy, Air Force, and Marines.
In this case, veterans might save enough money to make a decent settlement offer by cutting expenses, increasing income, or tapping into home equity.
- Apply to increase your VA disability income if you have a new or secondary medical condition.
- Apply for a VA housing grant to buy or change a home to meet your needs to live independently.
- Apply for a VA cash-out-refinance loan home to tap into the equity in your primary residence to consolidate debt.
Disabled Cancer Patients
Credit card debt forgiveness is viable for disabled cancer patients who discover how to utilize government benefits for people with grave illnesses. In this case, reducing other expenses might help them save enough money to make a meaningful settlement offer.
Cancer patients are frequently eligible for home improvement help under the health and safety criteria of the Weatherization Assistance Program. They have weakened immune systems after debilitating rounds of radiation and chemotherapy, possibly needing hygienic flooring, upgraded heating and cooling systems, etc.
Disabled Individuals
Credit card disability insurance is a modest debt forgiveness resource for anyone who signed up for this coverage before suffering an injury or contracting an illness that prevents them from working. These programs will cover at least the minimum payment for a set period.
Many people elect these extra perks and forget they even have them. Therefore, search the last eighteen months of statements for disability insurance transactions billed to your credit card. Also, contact the issuing bank to inquire if you have this coverage.
Disability Debt Collection
Learning the rules for credit card debt collection while on disability prepares you to pull the second forgiveness lever, creating fear that the issuing bank will never get another dime because of financial hardship.
In other words, communicate that a lawsuit is pointless because they cannot garnish wages or recover money from property liens and that bankruptcy is possible.
Wage Garnishment
Wage garnishment rules can impede debt collection while on disability, making credit card balance forgiveness more feasible. Creditors will be more amenable to your settlement offer when a lawsuit has no value because they cannot take a portion of future Social Security checks.
Social Security disability cannot be garnished for credit card debt. However, you must follow specific rules to protect your money from debt collectors.
- Establish a dedicated account to receive direct deposits
- Spend the money immediately on other priority bills
- Keep the balance under two times the monthly benefit
Judgement-Proof
Making yourself judgment-proof can hamper debt collection while on disability, bringing you a step closer to credit card balance forgiveness. Creditors are more likely to agree to your settlement offer when a lawsuit has no value because property liens are toothless.
A lien is a legal right to take possession of a property until the owner discharges an obligation. Disabled individuals are often judgment-proof when they have no assets worth seizing after a successful lawsuit.
Social Security rules for countable resources mean SSI recipients are closer to being judgment-proof than SSDI beneficiaries. Their nominal asset levels often mean a property lien is not worth the cost of a lawsuit.
| Countable | Non-Countable |
|---|---|
| Cash, stocks, bonds | House you live in |
| Bank accounts | One vehicle |
| Land | Burial plots |
Statute of Limitations
The Statute of Limitations (SOL) is another helpful debt collection tool to use while on disability to achieve credit card balance forgiveness. Creditors are more likely to accept a settlement offer when they fear time is running out.
The statute of limitations on credit card debt time-bars creditors from starting a lawsuit but does not absolve you of the obligation. The SOL varies by state, but most fall into the three to six-year range.
Research the SOL rules in your state, and avoid resetting the date by making a partial payment.
Bankruptcy Protection
The threat of bankruptcy is the ultimate debt collection tactic while on disability, stimulating credit card balance forgiveness for many individuals. Creditors are more prone to accept your immediate settlement offer when they fear Chapter 7 or 13.
Filing for bankruptcy on credit card debt is a last resort strategy because of the long-term damage to your consumer report and score. Bankruptcy is a major derogatory mark that affects your future borrowing power.
- Chapter 7: ten years
- Chapter 13: seven years
However, you do not have to file for bankruptcy to make your strategy work. The banks know you have this option and respond to your signals.
Desist Order
Finally, filing a cease and desist order will stop the debt collectors from contacting you while on disability but hurt your chances of achieving credit card balance forgiveness. You cannot negotiate a settlement if you stop collaborating and sending signals.
A cease and desist order stops the creditor from communicating with consumers about debt except under specific circumstances. For example, they can still mail to inform you of their intent to seek other remedies, such as a lawsuit.
You still owe the money after enacting a cease and desist order, but you lose the ability to negotiate a settlement before the case goes to court.
