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Americans now owe approximately $1.18 trillion on their credit cards, according to the . Elevated interest rates and persistent inflation have made this burden even heavier by squeezing household budgets. While credit card balances declined by $29 billion in the first quarter of 2025, overall debt levels remain historically high.

For consumers carrying unmanageable debt, could be helpful. This process, also known as credit card debt forgiveness, allows you to negotiate with creditors to accept less than the full amount owed, essentially forgiving part of the debt. But as more people explore this option, creditors may become selective about which cases they approve.

So if you're considering this August, what steps should you take now to ? We asked financial advisors and debt relief specialists to share their strategies for getting the best outcome.

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"Debt settlement is a good option [if you have] $7,500 or more in unsecured debt, such as credit card, medical, personal loan or business debt," says Natalia Brown, chief consumer affairs and credit relations officer at National Debt Relief. But qualifying requires more than having debt you can't pay. Creditors want to see evidence of financial hardship and organized documentation before they will consider reducing what you owe.

According to the experts we interviewed, taking four steps this August can help you build a strong case for settlement approval:

First, "visit AnnualCreditReport.com to access all three major credit reports," Emma Protsik, supervisor of financial coaching at Ent Credit Union, advises. "This will show your current debt, account status and help identify which accounts may qualify for settlement."

Next, create a comprehensive financial inventory. "Know your income, expenses and total debt load," says Christopher L. Stroup, a certified financial planner and president of Silicon Beach Financial. Stroup recommends gathering all relative documents and details for each debt balance. A spreadsheet with these details shows you're prepared and helps a debt assistance firm prioritize debts to tackle first.

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While documentation requirements vary by company, Brown notes that formal paperwork isn't always necessary upfront. But "the stronger and more verifiable the hardship, the better the chances of reaching a favorable settlement," Protsik highlights.

"Expect to submit income statements, recent tax returns, job termination letters, medical bills or divorce decrees," Stroup says. "The most persuasive case shows a clear drop in income combined with unavoidable expenses." Ideally, you'll show that your earning power has declined and that you're facing expenses beyond your control (not overspending on discretionary items).

At this point, you can choose between two paths forward: negotiating with creditors or partnering with a .

Research is paramount if you'd rather work with a firm. "Avoid companies that [demand] upfront payments or make unrealistic promises," Brown cautions. "Legitimate providers only collect fees after a successful settlement."

As you research companies, Protsik advises reading reviews, verifying licenses and checking for complaints through the Better Business Bureau. Seek out firms with International Association of Professional Debt Arbitrators (IAPDA) accreditation. And during your consultations, vet potential partners by asking these questions:

Once you reach a settlement deal, Protsik emphasizes protecting yourself with a written agreement that confirms the following items:

This serves as your legal protection and ensures both parties understand the terms. Without it, you have no recourse if the creditor later claims you still owe the full amount or reports the settlement incorrectly to credit bureaus. "Never make payments without this documentation," stresses Protsik.

"Debt settlement can be a lifeline if you're overwhelmed by unsecured debt and can't repay it," Stroup explains. "But if your credit is strong, your income is steady or you're close to paying off balances, alternatives may be better." Before committing, Brown suggests considering all  to better determine which is most appropriate your needs and goals. Finally, remember that . Protsik warns it often takes 24 to 48 months to complete. If you decide to move forward, consult top debt relief companies and nonprofit credit counselors to compare approaches and find the strategy that fits your situation.