Debt Forgiveness

Business, Legal & Accounting Glossary

Definition: Debt Forgiveness




Full Definition of Debt Forgiveness


Debt forgiveness refers to partial or complete forgiveness of debt. More commonly used term is debt relief. Debt forgiveness is frequently used to refer to Third World debt. Debt could be owed by organizations, individuals or by countries. In the 1990s a large number of NGOs and other organizations came together under the aegis of Jubilee 2000 to launch a campaign to advocate debt relief for indebted, underdeveloped and developing countries. Jubilee 2000 managed to motivate countries and major organizations like the International Monetary Fund and World Bank to favour debt forgiveness.

Personal debt is a major problem faced by US citizens and people of other nationalities. Some methods adopted as part of debt forgiveness include credit counselling, consolidation loans, debt settlement, money management and bankruptcy. Some experts feel that debt forgiveness carries certain negative effects.

Third World Debt

Third World debt is a term used to identify all external debts owed by developing and underdeveloped countries in the world. Many of the Third World countries over-estimated their capability to collect enough tax money that could be utilized to pay off loans. This led to the development of Third World debt.

Non-Mortgage Debt

non-mortgage debt includes student loans, car loans, and credit cards. According to some estimates, average US household, non-mortgage debt amounts to $19,000.

Credit Counselling

Effective credit counselling helps an individual to avoid a situation where he or she may have to seek out debt relief. Counselling is done by finance professionals and firms with credible expertise in their area of work.

Negative Effects

Some experts present many arguments against the practice of debt forgiveness. They argue that debt forgiveness can lead to complacency and motivate the debtor to seek out more loans, in hope that they will be waived off.


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Debt Forgiveness. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 22, 2021 https://payrollheaven.com/define/debt-forgiveness/.
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Debt Forgiveness. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/debt-forgiveness/ (accessed: September 22, 2021).
American Psychological Association (APA):
Debt Forgiveness. PayrollHeaven.com. Retrieved September 22, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/debt-forgiveness/

Definition Sources


Definitions for Debt Forgiveness are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 26th March, 2020 | 7 Views.