They might forgive but they won't forget. Banks are more willing than ever to cancel some of your credit card debt, but the non-payment will remain on your credit report for years to come, dragging down your credit score.

So what do you do? If you are in true financial peril, the brink of bankruptcy, you might want to approach your credit card company (or the debt collector assigned to the account) and ask to pay off less than the full amount. In this economic climate, some banks have been known to forgive up to 70 percent of a consumer's debt. Why? Not for your sake, for theirs. Banks fear that the economic downturn is only going to get worse in the coming months, so they're taking what they can while they can.

The Financial Services roundtable, which represents all the big banks, even partnered with the Consumer Federation of America to try to come up with a broad loan modification program that could be applied across the board. For reasons I don't understand, the plan required approval from government regulators. And for reasons I really don't understand, regulators said no. So credit card companies are now negotiating with their customers one at a time.