Debt cancellation contracts were approved by the Comptroller of the Currency for national banks in 1963. They were upheld for national banks by a federal court in Arkansas and by the U.S. Court of Appeals for the Eighth Circuit in the First National Bank of Eastern Arkansas case. But they have not taken off.

The reasons debt cancellation contracts have not been widely used by national or state-chartered banks is that neither the Office of the Comptroller of the Currency nor the courts have addressed the myriad questions that must be answered before a debt cancellation program can be safely undertaken for installment loans, credit cards, or other credit products without regulatory and legal risk.

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