Heim>Debt relief options for military and veterans
Veterans and active-duty military members face their own unique challenges, but their service to the nation — whether past or ongoing — does not exclude them or their families from many of the same financial burdens and pitfalls that civilians face.
Fortunately, when it comes to debt management,debt relief, or financial assistance for veterans or active troops, there are programs available.
But first a word of caution.
Debt and Security Check
Debt issues are the number one reason active duty personnel lose their security status.
If your job requires a security clearance, Article 134 of the Uniform Code of Military Justice—a collective term often referred to as “the devil's article”—sets out rules for improper conduct that can cost you. That means watching your budget, or at least showing you're taking steps to get your finances in order.
For valid reasons – you are not considered trustworthy; Your judgment is suspect; You are a candidate for bribery or other illegal activities - too muchDebt can cost you a security clearance.
If you're applying for a job that requires a security clearance, the military can and will take your credit report. Staying on track with promotions, more responsibilities, and higher pay requires good financial management.
Here's how to do it.
Financial Assistance Programs
The federal government provides financial assistance programs that are aimed directly at active debt relief for military and veterans, and primarily prevent debt. The programs include a range of debt relief, including debt consolidation, immediate emergency assistance, housing assistance, student loan assistance and more. Military members and veterans drowning in debt can also take advantage of traditional debt relief such as debt consolidation and debt forgivenessnonprofit credit counseling.
Military Debt Consolidation Loan (MDCL)— MDCL is refinancing an active VA mortgage loan with a "payout" element that can be used to pay down unsecured debt such as credit cards, medical bills, payday loans and more. You make a single fixed monthly payment to the lender for a set period of time, rather than multiple loan repayments to multiple creditors. Since this is a mortgage refinance, there are closing costs that will be deducted from the final amount.
Veterans of foreign wars unmet needs— The program helps with unexpected financial difficulties faced by veterans as a result of deployment or other military-related activities or injuries. Military families can receive grants of up to $1,500 to help with basic living needs. The money goes directly to the creditor.
USA Cares Veteran and Family Support System- Includes emergency support, housing, job training and more for veterans facing challenges ranging from unemployment to foreclosure to PTSD.
Operation Familienfonds— is a nonprofit organization run by volunteers and funded by donations that provides grants to military families in need.
Operation First Response- Provides financial assistance to disabled veterans and their families, paying for things like utilities, mortgages, rent, groceries, and vehicles.
Personal Loans- are another way for military members and veterans to find debt relief. There are lenders that offer loans specifically to active military and veterans to pay bills and for emergencies. Personal loans for debt consolidation are usually unsecured – i. H. no property is used as collateral - and can be a traditional bank loan, a payday loan, a peer-to-peer (P2P) loan, or even a loan from family and friends. Personal loans from a lender usually require good credit, and high-interest payday loans can often cause further financial problems, so lenders and their offerings should be carefully researched.
debt settlement– is a debt relief option that allows you to pay less than what you owe on debt, but it can be a lengthy process that damages your credit report and costs you money in fees. A for-profit debt settlement company negotiates a lump sum settlement with your creditors. You make monthly payments to the company until you reach the negotiated amount. Once an agreement has been reached with the creditors, the amount raised by your payments will be used to pay the creditors. It stays on your credit report for seven years, and the waived balance is considered income and taxed by the IRS.
debt consolidation— Debt consolidation means lumping together multiple credit card debts, taking out a large loan from a bank or credit union to pay off them all, and then paying the lender back in one monthly payment. Aside from the loans already covered here, debt consolidation can include debt management plans, where a nonprofit loan advisor works with your creditors to lower interest rates and achieve an affordable monthly payment to pay off your debt in 3-5 years. Debt management will improve your credit score as your balances shrink and payments are made on time. It is not a loan and unlike paying off a debt, you pay the entire amount owed.
Consolidation of student loans– Similar to a debt consolidation loan in that it combines all of your student loans into one loan at a reduced interest rate. The Federal Direct Consolidation Loan is a way to consolidate federally-backed student loans. It offers low interest rates and extends the life of the loans, reducing the monthly payment. Some companies also offer personal student loan consolidation. The VA also offers student loan debt relief options, including the VA Education Debt Reduction Program, which repays some or all student loans for workers who accept a job at a VA center or hospital.
VA Program: Home Loans for Veterans
Leveraging VA mortgage rates is one of the military's key benefits. VA loan rates are typically lower than traditional loans. The Department of Veterans Affairs guarantees up to 25% of the payment on VA home loans, meaning no private mortgage insurance or down payment is required. Learn about the guidelines and requirements for this exceptional military achievement.
VA Personal Loan Options for Veterans
There are several lenders that offer personal loans to veterans and active military personnel, including those with bad credit. Unsecured loans are available up to $40,000 and interest rates range from as little as 4.99% to 36% depending on your credit history. Military spouses and dependents are also eligible for financial assistance. Personal loans can be used for any purpose, be it paying off credit cards, buying a new car, or a home improvement project. In most cases you can apply online and expect a response in less than 24 hours. Some lenders have special rates for the military, but restrictive conditions — approved credit history, direct deposit checking account, and more — must be met to qualify.
Debt Protection Programs for Veterans
Whether you're a veteran or active duty, look for companies that serve service personnel. Give these programs a chance. you will not take unfair advantage of your service; You give the vendor – who knows your money is tight – a chance to say thank you.
Otherwise, don't let yourself be put into a state of financial anxiety. Instead, use the protections in place to expand your tight dollars. These programs are specifically designed to keep military personnel and veterans out of debt.
The federal government has implemented safeguards to protect veterans, including:
Servicemembers Civil Relief Act (SCRA): Active-duty military personnel, reservists and members of the National Guard - while on active duty - are protected by SCRA, which includes the following provisions:
- Prevent your landlord from evicting you without a court order as long as the rent is below a certain level (it increases every year).
- Stop foreclosures without a court order
- stopsvehicle returnswithout a court order if you made a deposit, or at least one payment before you joined the military
- You cannot be brought to court for civil proceedings; this includes divorce and child support hearings
- Stops a self-storage facility owner from selling their belongings for overdue rent without a court order
- This allows you to cancel your cell phone contract if you move to a location not covered by your current carrier for at least 90 days
- Allows you to terminate a vehicle lease contract that you signed prior to joining the military if you are mobilized, deploying PCS OCONUS or OCONUS for at least 180 days
- This allows you to end an apartment lease without penalty if you provide it for 90 days or more
- Limit interest on all pre-service loans to 6%. This includes car loans, mortgages, student loans, credit cards, etc.
- Delaying payments under the SCRA will not affect your credit report.
Common Federal Travel Regulations: Designed to protect military personnel who are confrontedforeclosuresor evictions, this regulation provides for travel assistance cash payments and remittances related to landlord actions.
Military Lending Act: The MLA sets a cap on interest and fees imposed on military service employees who incur desperate debt: payday loans, anticipated tax refund loans, and vehicle title loans. It's really not a huge cap - 36% - but it beats what civilians sometimes pay.
If it seems desirable to consolidate your debt into a single payment (with an ironclad vow to avoid, at all costs, repaying those credit cards that have been paid off) at a lower interest rate, evaluate your options. Theimprove your credit score, the better the terms you can expect. Consider the lenders that cater to veterans and active-duty personnel: USAA and Navy Federal Credit Union.
Other Sources of Military Debt Forgiveness
Working through the VA bureaucracy can take its toll. Take advantage anywaystate VA benefit programscan be useful. The VA offers, among other things, financial advice and legal advice.
Meanwhile, if you're a veteran struggling to make ends meet after retirement, there are other sources. Here are a few other options:
The American Legion can provide cash grants to families who need help with housing, food, utilities, and health care expenses.
MilitaryOneSource, a Department of Defense organization, provides current and retired military members and their families with free financial advice, resources on navigating military life, education, housing and more
Organizations providing financial assistance to veterans include Operation First Response and The Coalition to Salute American Heroes. Each intervenes on behalf of veterans facing emergencies such as utility shutdowns, foreclosures or evictions, vehicle payments, food and groceries.
Disabled American Veterans supports veterans who have been disabled as a result of their service. With more than 1,300 chapters and 1 million members nationwide, DAV helps provide the resources veterans with disabilities and their families need to enjoy life to the fullest. Services include transportation, assistance in applying for services, education and home loan guarantees.
The American Red CrossFinancial support for military familiesprovides money for emergency travel, a family member's funeral, emergency food and shelter and more for active duty, activated National Guard or Reserve, immediate family, military retirees and spouses, widows or widowers. Help is available 24 hours a day, 365 days a year and those who need it can apply either by phone or online.
TheMilitary Family Counseling Networkprovides resources for military families and veterans regarding financial aid for housing, food insecurity, education and more.
military moneyprovides free debt and personal finance information and resources for military families. Her articles range from information on debt relief programs and housing benefits to details on education and retirement planning.
Legal assistance from the German Armed Forcesprovides free legal assistance to active-duty military personnel on all legal matters, from negotiating a lease to estate planning to adopting a child.
Debt Help for Military Spouses
Spouses of active military members can get help paying their bills and other debt relief under the SCRA. As noted above, the law caps interest rates on active-duty credit cards and mortgages and provides protections from eviction and foreclosure. In addition, there are health and life insurance benefits, housing benefits, and tax deductions for students who are married in the military.
As noted in a 2020 Military Lifestyle Survey by Blue Star Families and the Institute for Veterans and Military Families, families of veterans and active duty personnel face financial and other challenges. Unemployment and underemployment are the most common causes of financial strains among the surveyed active-duty family members who reported financial strains; student loans; and moving expenses out of pocket.
- 77% of surveyed active-duty families who have out-of-pocket housing expenses spend more than $200 a month more than their base housing allowance.
- 20% of active-duty spouses are unemployed and actively looking for work. 67% of employed spouses in active employment report being underemployed.
- 67% of active-duty spouses earned less than $20,000 in 2019; 40% earned no income at all in 2019.
- 28% of active-duty family members surveyed say “military pay” is one of their top five concerns.
- 14% of active-duty family members surveyed reported low or very low food security.
importance of budgeting
Of course, financial assistance for veterans and active-duty military personnel begins where it begins for all Americans, with a budget. While it's no fun, it's just as essential to your financial health and avoiding debt as tackling a 20-mile hike in full combat gear is to your survival in enemy territory.
No financial assistance program ever created can meet your cash needs unless you are willing to do the hard work of figuring out where your income is going, developing a plan to manage it, and sticking to it.
Budgeting can be as simple as tracking monthly income and bills on a notepad or document on your computer. It doesn't have to be fancy or complicated. There are also online templates and apps that can help you strategize your goals. Find out what works best for you to ensure you are consistent and on top of things.
The most important aspect of budgeting is to keep track of the funds coming in, which bills need to be paid and when. Setting up automatic payments and tracking when they're due can be a big step in ensuring bills are paid on time. Review your budget regularly and make adjustments as needed. Once you get used to it, it doesn't become a chore but a great debt relief tool that didn't cost you anything and is under your control.
TheGI bill, Montgomery GI Bill, Reserve Educational Assistance and the National Call to Service are just a few of the programs the government offers to active military personnel, reservists, veterans and their families to help defray the cost of college or professional education. The programs help fund an education that would otherwise be unattainable. In addition, more education can lead to more earning opportunities and fewer debt problems.
Searching for help
Veteran debt relief and active duty military debt relief options are wide and readily available. Also, remember that helping you pay bills isn't just about loans and grants, it's also about financial education and resources to help you manage money.
Those facing financial difficulties should seek help immediately, whether it's with a specific program that helps with a financial challenge or more general help, such as. B. a non-profit credit counseling.
The military knows it is in everyone's best interest that active duty members and veterans who are drowning in debt receive help and remain on a solid financial footing.
Military members, their families, or veterans who are at risk of losing their homes or facing other serious problems should not be ashamed or embarrassed, but know that help is available, including:
Homeowner Assistance Program: The HAP is available to active-duty personnel and veterans, as well as surviving spouses and civilian employees of the Department of Defense. It provides financial assistance to qualified candidates who need to sell their property at a loss or who are unable to sell their property.
Nonprofit Credit Advice: Military personnel and veterans should know better than most the value of consulting experts on complicated matters. Nonprofit credit officers know the levers to pull to create the best possible conditions for managing and ultimately eliminating debt.
Nonprofit credit advisors are required by law to act in a client's best interests. The credit counseling session is free and they will review your finances, help you create a budget and discuss debt relief options.