Available Debt Relief Options for Veterans
Many veterans are often faced with unexpected financial burdens like medical expenses, educational loans and even everyday living expenses. With a limited income, these financial burdens can amount to huge debts. Fortunately, veterans have multiple debt relief options that can help them regain control of their finances.
Veteran Affairs (VA) Debt Management Programs
VA Debt Management Programs are designed to help veterans who have incurred debts related to VA benefits, medical care or other services. Features of VA debt management programs include flexible repayment plans, reduced interest rates, late fee waivers and financial counseling services. It is also worthy of note that this program runs an appeal process for veterans who believe that a debt was incorrectly assessed to contest the debt.
To apply for the VA Debt Management Programs, veterans can contact their local VA office or visit the VA's official website. Either way, they will be able to choose a program that suits the nature of their debt and begin the application process immediately. You will be required to submit your VA File Number or Social Security Number, deduction code and a financial status report as part of your application.
Public Service Loan Forgiveness (PSLF)
This debt relief option is available to both veterans and active-duty service members. The program was designed to “forgive” the remaining balance on federal Direct Loans for borrowers who have made 120 qualifying monthly payments while working for a qualifying employer. Veterans can enjoy flexible repayment plans tailored to their income.
To be eligible for PSLF, veterans must be employed full-time by a qualifying employer. This includes government organizations at the federal, state, local or tribal level and non-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code. Many veterans find that their service in the military qualifies them for this program, especially if they transition into roles within government agencies or non-profit organizations.
Debt Relief Grants
Debt relief grants are funds provided to eligible veterans to help them pay off or reduce their outstanding debts. These grants can cover credit card debt, medical bills and even personal loans. Grants are particularly a better debt relief option because, unlike loans, grants do not need to be repaid.
Veterans could benefit from various types of debt relief grants. They include:
- Military Debt Relief Grants for veterans and active-duty service members in financial hardship. They specifically cover essential living expenses and may help reduce a veteran's debts.
- Grants for Disabled Veterans are often provided by quasi-public organizations and NGOs for disabled veterans. These grants can provide financial assistance that will help this category of veterans manage their debts.
- Emergency Grants are provided to veterans in immediate financial crises. They can cover urgent expenses that may reduce the debts incurred by veterans.
To qualify for any of the above grants, veterans are expected to fulfill specific criteria. They must provide proof of military service and financial need. During the application process, they will be required to provide personal information and financial details of income, expenditures and existing debts.
Debt Consolidation Loans
This financial product allows veterans to combine multiple debts into a single loan. By taking a single debt consolidation loan, the veteran is able to pay off other loans and focus on a single repayment plan. This comes at a lower interest rate and a simple repayment plan that is easier to manage. Other perks of a debt consolidation loan include financial counseling and an improved credit score.
To apply for a debt consolidation loan, lenders will request a veterans credit score, employment history, full details of income from employment, disability benefits, or other sources of financial support and a debt-to-income ratio. Please note that a reliable income source, high credit score and low debt-to-income ratio increase your chances of getting a debt consolidation loan.
Credit Counseling Services
This is one option that is rarely spoken about, yet it offers immense benefits for veterans with huge debts. Credit counseling is a valuable resource for veterans looking to manage their debt and improve their financial situation. This service can afford a veteran the opportunity to work with a trained professional to assess their financial situation and develop appropriate strategies to reduce their debts.
By getting credit counseling, veterans can improve their credit scores and prevent future debts. They may also gain access to a financial community or support groups that may aid their financial recovery.
For free financial counseling, veterans can visit the Military OneSource website or contact their local VA. Other options include the Veterans Benefits Banking Program and online resources.
Final Thoughts
The transition from military to civilian life undoubtedly takes a financial toll on many veterans. Thankfully, veterans can effectively manage debts with veteran debt relief options like debt management programs, public service loan forgiveness, grants, debt consolidation loans and credit counseling services. By taking advantage of these options, veterans can find the necessary support they need to overcome financial difficulties.