To calculate the Credit Forgiveness Amount (CF):
CF=(TD−AP)×FR
Where:
Credit forgiveness is a financial relief mechanism where a lender agrees to forgive a portion of a borrower’s debt. This can occur in various situations, such as during financial hardship, through debt settlement programs, or as part of government initiatives. The forgiven amount is typically determined based on the borrower’s ability to pay, the total debt owed, and the agreed-upon forgiveness rate. Credit forgiveness can provide significant relief to borrowers by reducing their overall debt burden and making it easier to manage their remaining financial obligations.
Let's assume the following values:
Using the formula:
CF=(20000−5000)×0.25=3750
The Credit Forgiveness Amount is $3,750.
Let's assume the following values:
Using the formula:
CF=(50000−10000)×0.10=4000
The Credit Forgiveness Amount is $4,000.