 TITLE: What Happens with Canceled Debt? CONTENT: What Is Cancellation of Debt?\n-----------------------------\nDebt cancellation happens when a lender forgives or discharges some or all of a debt that you owe. The process typically doesn't affect your credit score—unless it happens in bankruptcy—but it could end up costing you. Debt cancellation typically happens in accordance with a debt forgiveness program.\nFor example, the U.S. Department of Education offers income-driven repayment plans to federal student loan borrowers. If you get on one of these plans, your repayment term will last 20 or 25 years, after which any remaining debt is forgiven.\nWith debt cancellation, you're no longer on the hook for the canceled amount, and you don't have to worry about the lender coming after you in the future. END