Credit Forgiveness Calculator

Formula

To calculate the Credit Forgiveness Amount ($CF$):

\[ CF = (TD - AP) \times FR \]

Where:

$CF$ is the Credit Forgiveness Amount
$TD$ is the Total Debt
$AP$ is the Amount Paid
$FR$ is the Forgiveness Rate (decimal)

What is Credit Forgiveness?

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.

Example Calculation 1

Let's assume the following values:

Total Debt ($TD$) = $20,000
Amount Paid ($AP$) = $5,000
Forgiveness Rate ($FR$) = 0.25 (25%)

Using the formula:

\[ CF = (20000 - 5000) \times 0.25 = 3750 \]

The Credit Forgiveness Amount is $3,750.

Example Calculation 2

Let's assume the following values:

Total Debt ($TD$) = $50,000
Amount Paid ($AP$) = $10,000
Forgiveness Rate ($FR$) = 0.10 (10%)

Using the formula:

\[ CF = (50000 - 10000) \times 0.10 = 4000 \]

The Credit Forgiveness Amount is $4,000.