How interest concessions in a debt plan are calculated
There is no U.S. program that writes off a fixed share of interest by rule. What actually happens is that a nonprofit credit counseling agency asks each creditor to drop the rate on an enrolled account, and the creditor decides whether to agree. This calculator shows what that concession is worth: enter the balance, the rate you pay now, the rate offered in the plan and your monthly payment to see the interest and time saved.
The comparison holds the monthly payment constant, so the entire benefit shows up as a shorter payoff and less interest. If the payment does not cover the monthly interest at either rate, the calculator says so rather than producing a payoff date.
Legal background (as of September 2026) — no federal statute requires a rate reduction or caps the interest on most consumer credit cards; rates follow the cardholder agreement and state law. Credit counseling agencies are approved under 11 U.S.C. 111, and the FTC Telemarketing Sales Rule, 16 C.F.R. 310.4(a)(5), bars advance fees for debt relief services. If a creditor forgives principal rather than interest, the forgiven amount can be taxable income under 26 U.S.C. 61(a)(11) unless an exclusion in 26 U.S.C. 108 applies.
This calculator is for reference only and is not legal advice or tax advice. Consult a licensed attorney, an approved nonprofit counselor or a tax professional about your specific situation.
Frequently Asked Questions
No. Each creditor decides separately, so a plan can end up with different rates on different accounts. Enter a blended figure only if your counselor gave you one.
Forgiven principal is generally treated as income under 26 U.S.C. 61(a)(11) unless an exclusion such as insolvency or bankruptcy under 26 U.S.C. 108 applies. Interest that is simply reduced going forward is not forgiveness of an amount already owed.