How to Absolve Debt

What to do when your debt becomes overwhelming.

What to do when your debt becomes overwhelming.

If you’re struggling financially and looking to get free from debt, a lender or creditor may be willing to forgive a portion or all of the remaining debt you owe, but there is no guarantee. Although it isn’t easy to absolve or eliminate debt, it's sometimes possible if you can prove excessive financial hardship. Depending on the types of debts you have, there are different options available for wiping out your debts.

Student Loan Debt

If student loan debt is weighing you down after college, a federal student loan forgiveness program may be the ticket to get you out from under. As long as a federal direct loan program made your student loans, the federal government will absolve or forgive the amount of debt remaining after 10 years. You must perform full-time public service work for a government or nonprofit organization in a field such as teaching, nursing, social work, law enforcement, military service or other public safety employment. To qualify for student loan forgiveness, you must first make 120 monthly loan payments. Another eligibility requirement is that you cannot be in default on the loans for which you request forgiveness.

Mortgage Loan Debt

If you can no longer handle making the monthly mortgage payments on your home, the federal government gives you a way out that lets you avoid foreclosure and the negative impact on your credit report. The Home Affordable Foreclosure Alternatives program allows you to choose a short sale or Deed-in-Lieu of foreclosure to get out of paying your mortgage. By choosing a short sale, your mortgage lender agrees to let you sell your house for less than what you still owe on the balance of the principal. You and the lender must settle on a sales price. Afterward, the lender absolves the remainder of your mortgage debt. A Deed-in-Lieu of foreclosure involves transferring ownership of the property back to the mortgage lender at which time the lender releases you from your loan obligation. Proving financial hardship is just one of the requirements you must meet to qualify for either option.

Credit Card Debt

If you are looking for a way to free yourself of heavy credit card debt, debt settlement companies will negotiate with your creditors to allow you to pay off the debt for less than what you owe. While debt settlement offers you a way to partially absolve your credit card debts, your credit score can take a really hard hit when a creditor writes off a portion of your debt. Debt management is an option for repaying unsecured debt without hurting your credit score. A debt management program doesn't eliminate the debt, but lowers or eliminates interest rates and waives payment late fees and penalties to bring down the overall cost. Developing a payment schedule allows you to pay off the debt, usually within four to five years.


Bankruptcy is an option to consider as a way to absolve some of your debts. The major difference between Chapter 7 and Chapter 13 bankruptcy is that Chapter 7 absolves most of your unsecured debts. Bankruptcy does not forgive secured debts such as home mortgage and auto finance loans. You have to sell your home and other valuable property you own to clear those debts. Bankruptcy doesn’t automatically discharge student loan debt either. You must prove total and permanent disability or show that paying the loans will cause you undue financial hardship. With Chapter 13 bankruptcy, you get to keep your home and other assets. You set up a three- or five-year schedule to repay a portion of your debts. After you complete the repayment plan, the bankruptcy court eliminates the remaining dischargeable debts.


About the Author

Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.

Photo Credits

  • George Doyle/Stockbyte/Getty Images