Debt Cancellation Contract

While it functions in some ways like credit insurance, a debt cancellation contract is a customized agreement in which debt with a creditor can be suspended or forgiven under specified circumstances. Think: Death, military service, medical infirmity, divorce, accident, or death again.

The borrower pays a premium fee, and it is issued directly from the lender. Although regulated by federal and state banking laws, a debt cancellation contract is not classified as insurance, so it does not have the lender coverage that insurance provides. Bono (the singer, not the financial genius) is big on debt cancellation on the national basis for African countries. He clearly has not considered what happens the next time the African nation goes bankrupt, wants to borrow money, and no lenders suddenly raise their hands to give them money.

Great singer though. Love "One."