# Is debt forgiveness part of any stimulus or bailout proposals?

**URL:** <https://boards.straightdope.com/t/is-debt-forgiveness-part-of-any-stimulus-or-bailout-proposals/470459>\
**Category:** Factual Questions\
**Created:** [October 31, 2008, 5:05pm UTC](https://boards.straightdope.com/t/is-debt-forgiveness-part-of-any-stimulus-or-bailout-proposals/470459 "2008-10-31T17:05:38Z")\
**Posts on this page:** 4\
**Page:** 1

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**Author:** ![What\_the](https://avatars.discourse-cdn.com/v4/letter/w/f4b2a3/32.png) [@What\_the](https://boards.straightdope.com/u/What_the)\
**Post date:** [October 31, 2008, 5:05pm UTC](https://boards.straightdope.com/t/is-debt-forgiveness-part-of-any-stimulus-or-bailout-proposals/470459/1 "2008-10-31T17:05:38Z")

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I’m talking about using government funds to payoff or forgive either mortgage debt or credit card debt.

Seems like I’ve heard talk of doing so either based on flexibility in existing legislation, amending existing legislation or new (stimulus or otherwise) proposals.

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**Author:** ![dolphinboy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dolphinboy/32/330_2.png) [@dolphinboy](https://boards.straightdope.com/u/dolphinboy)\
**Post date:** [October 31, 2008, 5:19pm UTC](https://boards.straightdope.com/t/is-debt-forgiveness-part-of-any-stimulus-or-bailout-proposals/470459/2 "2008-10-31T17:19:48Z")

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I don’t think so… and I certainly hope not. For those of us who have dutifully paid our mortages and credit card bills on time it doesn’t give us much of an incentive to continue doing so.

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**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\
**Post date:** [October 31, 2008, 6:34pm UTC](https://boards.straightdope.com/t/is-debt-forgiveness-part-of-any-stimulus-or-bailout-proposals/470459/3 "2008-10-31T18:34:18Z")

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The details have not been worked out, but proposals may follow [the plan used in the IndyMac bailout](http://www.latimes.com/news/printedition/front/la-fi-indymac31-2008oct31,0,1884603.story):

> [@](#):
>
> The goal is to reduce the monthly payment on a loan, including taxes and insurance, to no more than 38% of the borrower’s pretax income. To reach the target, the FDIC is prepared to take as many of the following steps as necessary:
> 
> - Reduce the interest rate to as low as 3%.
> 
> - Extend the loan’s term to 40 years.
> 
> - Waive interest on a portion of the mortgage balance. The borrower would still owe that amount but wouldn’t have to pay it back until the loan was refinanced or the house was sold.

So none of the debt is forgiven, but the terms are modified so that the homeowner could make the payments and avoid foreclosure.

I don’t think anyone is proposing any relief for credit card debt.

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**Author:** ![What\_the](https://avatars.discourse-cdn.com/v4/letter/w/f4b2a3/32.png) [@What\_the](https://boards.straightdope.com/u/What_the)\
**Post date:** [November 2, 2008, 1:44pm UTC](https://boards.straightdope.com/t/is-debt-forgiveness-part-of-any-stimulus-or-bailout-proposals/470459/4 "2008-11-02T13:44:39Z")

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Looks like the credit card debt forgiveness proposals are coming from the financial institutions themselves …

[http://www.reporternews.com/news/2008/nov/01/banks-asking-for-credit-card-debt-forgiveness/](http://www.reporternews.com/news/2008/nov/01/banks-asking-for-credit-card-debt-forgiveness/)