Few Government Debt Relief Programs Exist
Although the US federal and state governments often provide a number of programs designed to help those with low incomes and/or bad credit, debt is, unfortunately, something youll likely have to handle without government help.
Thats because few government debt relief programs exist at the national level, and state-run or sponsored programs seem to be equally few and far between.
In general, if your debt is from credit cards or personal loans, youll likely need to stick with civilian programs and companies. If your debt problems involve student loans or a home mortgage, however, you may have some options.
For instance, some student loans can be forgiven, canceled, or discharged under specific circumstances, such as loan forgiveness for working in public service or as a public school teacher.
When it comes to mortgage debt, you may find a little help from the government through the Home Affordable Refinance Program . Keep in mind there are specific qualifications for HARP, such as being current on your payments.
Relief Through Debt Management Plans
A debt management plan allows you to pay your unsecured debts typically credit cards in full, but often at a reduced interest rate or with fees waived. You make a single payment each month to a credit counseling agency, which distributes it among your creditors. Credit counselors and credit card companies have longstanding agreements in place to help debt management clients.
Your credit card accounts will be closed and, in most cases, youll have to live without credit cards until you complete the plan.
Debt management plans themselves do not affect your credit scores, but closing accounts can hurt your scores. Once youve completed the plan, you can apply for credit again.
Missing payments can knock you out of the plan, though. And its important to pick an agency accredited by the National Foundation for Credit Counseling or the Financial Counseling Association of America. Even then, make sure you understand the fees and what alternatives you may have for dealing with debt.
Can Sbacom Help Me Access The Small Business Debt Relief Program
No. We can only provide you with the information contained on this page. If you have questions about your current loan and whether or not your loan is automatically deferred, The U.S. Small Business Administration recommends you contact your loan servicing office directly using the following information:
- Birmingham Disaster Loan Servicing Center:
- Phone: 800-736-6048
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Debt Settlement Vs Bankruptcy
When the process works as intended, debt settlement can benefit everyone involved. Consumers get out of debt and save money, debt settlement firms earn money for providing a valuable service, and creditors receive more than they would if the consumer stopped paying altogether or entered chapter 7 bankruptcy. Chapter 7 bankruptcy involves liquidating the debtors non-exempt assets and using the proceeds to repay creditors. Exempt assets vary by state but often include household and personal possessions, a certain amount of home equity, retirement accounts, and a vehicle.
Compared to debt settlement, Detweiler says, if a consumer is eligible for chapter 7 bankruptcy, it may be a faster option. It is a legal process that can stop collection calls and lawsuits. Debt settlement doesn’t offer those guarantees. Still, he adds, there may be a variety of reasons why chapter 7 may not be a good option. A consumer may have to surrender property they may feel they need to keep. Or they may not want their financial troubles to be a matter of public record. Consumers could also find their employment options limited if they declare bankruptcy, as some professions evaluate workers credit histories.
Chapter 7 bankruptcy can be over and done after three to six months, versus years for debt settlement. It can be less stressful and may allow your credit score to recover faster, though bankruptcy will remain on your credit report for 10 years.
File A Complaint About A Debt Collector
Report any problems you have with a debt collection company to your State Attorney General’s Office, the Federal Trade Commission , and the Consumer Financial Protection Bureau . Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your state Attorney Generals office can help you find out your rights under your states law.
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Supplemental Security Income Disability Program
This supplementary income is offered through Social Security and pays based on financial need. The program is designed to help the elderly and people with disabilities who have little or no income. SSI provides cash for expenses like food, clothing, and shelter. Participants receive checks on a monthly basis, and payment amounts vary by state. The money comes from tax revenues, not Social Security.
Debt And Grants Due To Education
Many of the families are not able to manage the basic needs of their family and thats why for them it is very tough to handle the expenses of their childs education. And when this type of situation has come in front of them, they do not need to worry. Because the government has countless grants for debts schemes. And those schemes can help the people to put their children in school and college for their further education.
But these scheme-related grants have one drawback. The drawback is that a student has to take a loan for their study and in the future, he or she has to pay the loan. If they do this then they can able to get the grant under the schemes to pay off debt.
It comes where many of the private programs and schemes support the families who are unable to afford the cost of the education. These valuable assistance grants are provided to them, so their children will get a proper education. These schemes provide scholarships and these are given to those children or students who need them and also who is deserves them. Because many of the students need the opportunity to show their talent and with this, they can fulfill their dreams and chase them.
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What Is Provided For Under The Debt Relief Program
Under the Debt Relief program, the U.S. Small Business Administration will automatically cover payments on eligible loans, including principal, interest and fees, for a period of six months.
- For existing borrowers with a 7, 504, or Microloans, the U.S. Small Business Administration will automatically cover loan payments including principal, interest, and fees, for a period of six months.
- For new borrowers, the U.S. Small Business Administration will cover loan payments, including principal, interest and fees, if the borrower applies for and receives a 7, 504, or Microloan prior to September 27, 2020.
Best National Debt Relief Programs
When bills are piling up and you begin to fall behind on payments, debt relief programs can provide much-needed assistance to get out from the under the weight of all those unpaid notices and back on the path to good credit. Keep reading for our take on how to approach seeking out debt relief programs.
There is a small aquatic plant, called duckweed, that can expand from a few small leaves and take over the entire surface of your aquarium in a matter of months. While many fishkeepers will argue that duckweed has its place in moderate amounts, it can help keep your water clean too much of it can be a serious problem.
Unfortunately, debt can be much like that prolific plant what starts as a little helpful debt can quickly grow well beyond beneficial levels. But while duckweed can be controlled with a handy net, debt relief may often require a little outside assistance for the best results. Lets explore our picks for some of the best debt relief companies out there today, learn about whether government programs can provide assistance, and take a closer look at how debt relief actually works.
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How Does Debt Relief Affect Your Credit
The effect of debt relief on your credit score depends on which option you use. Any solution that pays back everything you borrowed should have a neutral or positive impact on your credit. Reducing interest charges or eliminating fees does not result in credit damage. On the other hand, any solution that gets you out of debt for less than the full amount owed damages your credit score.
Refinancing will not damage your credit as long as you make all the payments as scheduled. The same is true of a consolidation or a modified loan. Negotiating a lower rate on a credit card will also not have any negative effect on your credit. Deferment and forbearance also do not hurt your credit, because the creditor agrees to change your payment schedule.
The impact of workout arrangements and credit card debt management programs is usually neutral or positive. These solutions help you avoid missed payments and build a positive credit history. Most credit users dont see any damage to their credit using these solutions. However, these methods will close the accounts. This can have a slight negative effect on your credit, but the damage is usually nominal.
Solutions like debt settlement, short sales, and voluntary surrender all damage your credit. You incur a seven-year negative remark on your credit report for each of these. Foreclosure and Chapter 13 bankruptcy also result in a seven-year credit penalty. Chapter 7 bankruptcy has a 10-year penalty. Back to top
Establishing And Maintaining Credit
Two of the many challenges for low-income families are establishing a solid credit history and maintaining good credit when you do.
Equifax, one of the three major credit bureaus in the U.S., estimated in 2020 that there were 25 million consumers who were credit invisible. That means they have not used a credit card or taken out any loans that would tell lenders how good they were at paying things off. Equifax judged another seven million people to be credit unscorable meaning they had used so little credit that there wasnt enough information to given them a credit score.
Lacking a credit history, low-income consumers either wont get approved for a loan or if they do, they face much higher costs to use credit to purchase a home, a car or any big-ticket item.
Higher-income consumers obviously possess more money, better lifestyles and more luxury items, but they also have more ways to get and keep good credit.
The Consumer Financial Protection Bureau said low-income consumers are 240% more likely to start their credit history with negative records, such as a debt collection. Higher-income consumers start with positive records, such as opening a credit card or getting a co-signer who has good credit.
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Who Can Get A Grant
The federal government awards grants to organizations including:
State and local governments
The intent of most grants is to fund projects that will benefit specific parts of the population or the community as a whole. What you might see about grants online or in the media may not be true. The federal government does not offer grants or free money to individuals to start a business or cover personal expenses. For personal financial assistance, the government offers federal benefit programs. These programs help individuals and families become financially self-sufficient or lower their expenses.
Veterans Administration Disability Benefits
Those who served in the military and have disabilities as a result could and should qualify for tax-free monthly payments via VA Disability Benefits. Compensation also may be available to those whose disabilities or illness may be a result of military service experience a condition like post-traumatic stress disorder.
Were not talking lavish amounts of money, though every little bit helps. Disability rates vary depending on the condition and family status. In 2021 a 50% disabled veteran who is married with one child receives $1,056 per month. A veteran with 70% disability of a leg who is married with two children can receive $1,717 per month. The VA provides a disability calculator to help determine your benefit.
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Financial Help For Disabled Children
The SSI program is one of few options to help a disabled child financially. Families must meet low income and asset requirements to receive monthly cash payments. The formula for determining eligibility is complicated and based on several factors. The federal base rate for benefits is $794 per month, though benefits vary by state.
The SSI program for children pales in comparison to other Social Security Administration programs. There are about 63 million beneficiaries and recipients of Social Security and SSI payments, which translates to more than $840 billion in benefits. Annual payments for SSI children total about $10.5 billion.
Children receiving SSI payments typically are in families with income below or near the federal poverty standard.
Other government programs that can help disabled children include TANF, SNAP, CHIP and Medicaid. A VA pension is a payment to low-income disabled veterans that can be increased if there is a dependent child.
Paying Off Your Debts
You can pay your debts in instalments by setting up:
- a Debt Management Plan which is an agreement with your creditors managed by a financial company
- an Administration Order when youve had a county court judgment or a High Court judgment against you for debts under £5,000
- an Individual Voluntary Arrangement which is managed by an insolvency practitioner
You can also get temporary protection from your creditors through the Breathing Space scheme, while still making repayments. Youll need to apply through a debt advisor.
In Scotland you can arrange a Debt Payment Programme from the Debt Arrangement Scheme.
You may also have the option of reaching an informal agreement with your creditors.
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Student Loan Debt Relief
There is a wide range of methods for student loan relief. The best choice usually depends on the type of student debt you have federal or private.
Relief options for federal student loans that dont affect eligibility for other federal relief programs:
Private student loan relief options:
- Student loan refinancing
- Private student loan settlement
Its important to note that you can use private refinancing for federal student loans. However, it converts federal debt to private. You lose all eligibility for federal relief moving forward.
Also, discharging student loans through bankruptcy is not as easy as other types of debt. To discharge, you must prove that not discharging those debts will cause continued financial hardship. Its possible to discharge these debts through bankruptcy. But youll need a good attorney to get the results you want.
Need to find relief from student loan debt? Talk to a specialist now to find the right solution.
Senate Republicans Block A Government Funding Bill In A Battle Over The Debt Limit
The federal government is on the brink of a partial shutdown after Senate Republicans blocked debate on legislation that would have simultaneously funded the government and suspended the nation’s borrowing limit.
The bill, which needed 60 votes to proceed, failed 48-50, as Republicans followed through on a threat to block the spending measure over objections to an unrelated spending package currently being negotiated by Democrats.
The legislation that was blocked Monday would have extended current spending levels through Dec. 3 and suspended the cap on federal debt through the end of 2022.
“The Republican Party has now become the party of default, the party that says America doesn’t pay its debts,” Senate Majority Leader Chuck Schumer, D-N.Y., said after the vote. “Let me be clear, what the Republicans in the Senate did tonight was not normal. This isn’t your typical Washington fracas and it shouldn’t be treated as such. It has far more severe consequences than the typical political catfight.”
Senate Republicans have said since at least July that they fully support the federal spending extension but not the debt limit measure. Senate Minority Leader Mitch McConnell, R-Ky., has ignored Democrats’ argument that Republicans helped drive up current debt levels when they authorized tax cuts under former President Donald Trump and by supporting bipartisan COVID-19 relief spending.
Copyright 2021 NPR. To see more, visit https://www.npr.org.
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Senior Citizen Financial Planning
Social Security experts recommend living on 70% of your pre-retirement income. So, if you earned $50,000 a year when working, you should be comfortable living on $35,000 a year.
In reality, how much you should save for retirement depends on your lifestyle.
This is how much of your total income you should be spending on housing, transportation, food and healthcare, according to the Bureau of Labor Statistics Annual Expenditure Report.
- Housing 32.4%
- Food 12.9%
- Healthcare 12.2%
These are the four greatest expenses for people over the age of 65. After the age of 75, healthcare costs eclipse transportation, taking up 15.6% of your income, while transportation drops to 13.9%.
To be clear, these are only averages. How much each person spends on each category will vary. You shouldnt set aside 17% of your budget for transportation if you live walking distance from your usual haunts. Nor should you throw budgeting to the wind for a European vacation just because you really want to see the Eiffel Tower.
If balancing your budget proves too daunting, consider working with a reputable financial advisor or nonprofit credit counseling organization. A credit counselor can review your debts and expenses to help you reach a level of financial stability.
Managing your debts is important no matter what stage of life youre in. The father of western wisdom, Socrates, said it best with his last words:
Crito, we owe a rooster to Asclepius. Please, dont forget to pay the debt.