With unemployment numbers spiraling out of control and the state of the US economy, along with job cuts on the rise and pay hikes nowhere in sight, you may be facing a situation where debt piles up to the extent where you're having troubles making ends meet. If you're facing such problems, government debt relief programs may be the solution to consider.
The good news is that there are government backed programs that can help deal with your debt, even personal debt and mortgages - however, it does come with a few caveats, as can well be expected. What exactly are the intricacies of these debt relief programs? Let's find out.
Government Grants for Debt Relief
Over the years, the trend that has been ingrained in the US culture is to buy on credit - in the process, spending money that you don't have. With existing spend patterns that are now practically inherent, the current economic scenario notwithstanding, the average consumer is reeling under a pile-up of debt.
However, you need to understand that the government does provide programs that only assist people in clearing debts. They in no way are meant specifically for clearing credit card debts that is led to believe by a lot of companies that claim to rid you off your debt.
How Authentic Are Such Programs
The federal government is definitely there to help its citizens, however, generally, the only thing that they can manage is to get the person in debt to help himself, and clear his own debts. You will find a lot of advertisements and banners claiming that the government has enough money set aside for you to clear your debts, bills, and, mortgages.
However, the only things government has set aside funds for, are a few student assistance programs, and relief for low-income families in terms of basic necessities.
If you are looking for a grant or program to help you pay off your credit card bill, then stop looking, because there aren't any. As illustrated by the following:
- There are no programs that will clear off your Credit Card Debt for you unless you have something to offer as a form of mortgage.
- The government isn't going to negotiate with any bank or finance institution on your behalf and get your debt settled or your credit rating back to normal.
- No debt relief fund is going to be credited to your account by any government or private institution. In fact, companies claiming to wipe out your debt history may end up charging service fees from you.
However, there are a few authentic debt relief programs that are beneficial, which are as follows.
- When you're considering a student debt relief program then the only federal grants that are going to be applicable to you are the ones that will offer a lower interest rate and decent monthly payments, only if the loan you had taken was a government one.
- Another kind of grant that is available is a mortgage grant (HAFA, HARP etc.) These basically help the individual to negotiate with the finance institution and try to obtain a more convenient mode of repayment of the loans. Similar to the student loans, these go only as far as reducing the interest a bit and making the monthly payments more affordable.
There are a few claims of people being sanctioned one huge loan to help pay of all their debts. It's known as debt consolidation - a process wherein a single loan is taken to enable payment of others.
Often this can work in the consumer's favor, if the interest rate is lower, and if it means that there is a single payment to make towards clearing debt, as opposed to several different bills and credit card policies, coupled with inflated interest rates and late payment fees.
However, debt consolidation will focus on unsecured loans, such as credit card debt - by using existing assets as collateral, which may mean a mortgage on a house, or other such asset.
Authentic government debt relief programs do exist however, not as how ads and banners claim them to be. Every year, the government sets aside billions of dollars to aid people in debt, but many are unaware that government aid is available for them. The applications for these grants are available in most government offices, as well as on the Internet.
Once you fill out the application for a government grant, several factors are considered when making a decision regarding your eligibility for aid, some of which are low income, outstanding debt which cannot be repaid on your current income, age (you must be 18 years old or above) and citizenship (you must be a US citizen).
Based on the information and documents provided, including your plans for grant money, your application will be processed by a government agency that will then decide whether you qualify under the policies for debt relief.
Income Based Repayment
While there aren't too many ways to get rid of your personal debts, things have been made slightly easier for students. The Income Based Repayment is a viable option for students who foresee difficulties in their loan repayment procedures. It allows a student to repay their loans as per their current income, provided they make their payments on time.
This policy takes into consideration your income and the size of your family to make repayments easier. Payment reductions are determined based on your loan amount and your current earnings.
The installment amount you pay will obviously rise if you start earning more, however, in the long run, it would always make sense to increase the repayment amount in order to get rid of the burden of student loans.
Flexible as this option is, you can even choose to combine your repayment with your spouse if he/she has also availed student loans. For any information, you need to get in touch with your loan service provider or browse the student aid website.
Government debt relief programs have provided a much-needed boost for the US economy, with millions out of jobs, reeling under crippling debt with little scope of repayment. Apart from these debt relief programs, there are certain Student Loan Forgiveness programs, which reduce monthly repayment on student loans and decrease the forgiveness period.
The economic recession that hit the US, was accompanied by a cascading effect that left very few unaffected by the downturn - but in the meantime, the debt ridden consumer may have some respite with government debt relief programs.
Taking the aid of a government grant may be an option that you haven't considered, so look at whether you qualify and whether or not the grant will work to your advantage - it may save you from filing for bankruptcy.
Enroll in a credit counseling or a debt management program - in many cases, there may be options that you are not aware of that can help you reduce, renegotiate or better manage debt. Take stock of all your available options and make an informed decision. Good luck!