Debt poses a challenge for Americans from all walks of life. Programs for debt relief can be helpful. Fortunately, if you’re a veteran, you may have access to veterans’ debt assistance programs.
Depending on the type of debt you have and your circumstances, you might qualify for one or more VA programs to help you get back on track with your financial goals.
How Does Veterans’ Debt Assistance Work?
Finding debt relief on your own can be a challenge, and it’s no wonder that many people find themselves wondering, “Is veterans’ debt assistance real?”
Fortunately, many opportunities for debt relief for veterans are very real. However, these opportunities are offered by different organizations, and some apply only in specific circumstances.
Not sure how to get financial help as a former service member? These are some good places to begin:
Military Debt Consolidation Loans
Many veterans (and many nonveterans, too) struggle with credit card debt. Given the high interest rates on most credit cards, this debt can snowball quickly.
The VA doesn’t directly offer assistance for credit card debt. However, a Military Debt Consolidation Loan (MDCL) can help you manage your credit card balances, consumer loans, and other existing debts.
MDCLs don’t work quite like most consolidation loans. Instead of simply borrowing money, you do a cash-out refinance for your home. Here’s how it works:
- You refinance for more than you owe on your mortgage
- The amount above what you owe is given to you in cash
- You use that cash to pay off debts
- You continue making payments on your higher mortgage principal
An MDCL can be very useful. However, you must have financed your home with a VA loan to qualify.
Interest Rate Reduction Refinance Loan
If you have a home purchased with a VA loan, you can tap into your equity to pay off high-interest debt. But what if the debt you’re struggling with is your mortgage? In this case, an Interest Rate Reduction Refinance Loan (IRRRL) from the VA could help you reduce your monthly mortgage payment and ultimately keep your home.
When you get an IRRRL from the VA, you refinance your home for a lower interest rate, which means that your monthly loan payment will decrease. If you have an adjustable-rate mortgage, you may have the option to convert it to a fixed-rate mortgage.
DVNF’s Grants to Provide Stability Program
The Disabled Veterans National Foundation operates the Grants to Provide Stability (GPS) Program for veterans. GPS isn’t intended for long-term support. However, if you’re having trouble paying for rent, utilities, or other necessities, you could receive a one-time grant of up to $1,000.
VA Debt Management Center
If you receive an overpayment of VA benefits, you may owe money to the VA. Unfortunately, repaying these funds may pose a challenge. The VA Debt Management Center can help you formulate a plan to repay your debt while minimizing fees and penalties.
Education Debt Reduction Program
If you have a college or graduate degree and work in healthcare at the VA, you could have your student debt reduced or eliminated. The Education Debt Reduction Program (EDRP) might not directly reduce your consumer debt, but it can free up money you can then use to pay toward your credit card balance and other debts.
What if I Can’t Qualify for a Veterans’ Debt Assistance Program?
Many veterans are eligible for debt relief. As a former service member, you might qualify for one or more veterans’ debt assistance programs. However, even if you qualify, there’s no way to guarantee that you’ll be approved.
Being rejected from a debt relief program can be discouraging, but you aren’t limited to programs designed just for veterans. A traditional debt consolidation loan may lower your interest rates and your monthly payments to help you pay down debt.
Another option to consider is debt settlement. This approach involves working with a company that negotiates with your creditors to reduce the total amount you owe. If successful, you may be able to resolve your debts for less than the full balance, which can make it easier to become debt-free faster.
You Have the Power to Overcome Debt
Few things make you feel powerless in the way that unmanageable debt can. Getting out of debt may not be easy, but it’s far from impossible. Set aside some time to learn about available veterans’ debt assistance programs, and you’ll have taken an important step toward financial wellness.
