Cancelling a debt is the act of forgiving a loan or other financial obligation, typically by a creditor to a debtor. This can occur for various reasons, including financial hardship, bankruptcy, or as part of a settlement agreement.
Cancelling a debt can have significant benefits for both the debtor and creditor. For the debtor, it can provide financial relief and improve creditworthiness. For the creditor, it can allow them to recover at least a portion of what is owed and avoid the costs associated with collection efforts.