Finder makes money from featured partners, but editorial opinions are our own. Advertiser Disclosure

Government debt relief programs

There are no government debt relief programs — but there are other ways Uncle Sam can help.

Debt relief is a general term for a program that puts you on track to paying off your debt. This includes debt settlement, debt management and credit counseling. While there are no government-sponsored debt relief programs, there are some programs that you can take advantage of — if you have government-backed debt.

Are there any government debt relief programs?

No, there are no government debt relief programs for individuals struggling with debt in general. In fact, government organizations like the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) warn consumers against using debt relief companies.

That's because debt relief companies often don't disclose the risk of their programs. Since these programs usually require you to make monthly repayments — which many enrollees already struggle with — many people aren't able to complete them in full. In some cases debt relief clients can face lawsuits for nonpayment and end up filing for bankruptcy.

Types of government debt assistance

While there is no government debt relief program, there are several government debt assistance programs and regulations that can help you cope with debt.

FTC regulations

While the FTC doesn't offer debt relief, it regulates what these companies can and can't do. Debt settlement companies aren't allowed to charge fees before actually settling an account. And they must make the following disclosures to customers before they sign up:

  • Cost. Debt relief companies must explain how much the service will cost you, when it will charge the fees and any additional terms.
  • Length of program. The companies also must disclose how long it typically takes to complete a program and when you can expect to see results.
  • When negotiations begin. The FTC requires companies to tell customers how much they must first save before the negotiation process begins.
  • Risks. Companies are required to disclose the risks of stopping payment to your creditors. This includes damage to your credit score and potential lawsuits and a higher balance due to unpaid interest and late fees.

You can file a complaint with the FTC and CFPB if you come across a company that fails to do any of these things. And before you sign up for debt relief, you can make sure the company and its owners are legit by searching for it on the FTC's list of banned debt relief companies and individuals.

Federal student loan forgiveness

The Department of Education has several forgiveness programs for federal student loan holders who work in public service, teach and are individuals with low income. You can also apply to have your federal loans discharged in several situations, such as school closures or if you experience a permanent disability.

Tax debt forgiveness

You can settle your tax debt through the IRS by applying for an offer in compromise. This is only available to people who are facing financial hardship and can't afford their full tax debt.

If you qualify, you can either pay a lump sum or pay off your account in full with monthly installments. Some law firms offer assistance with this process, but that can tack on an unnecessary expense.

Tax deductions

Deduct interest you pay on certain types of loans from your income. For example it's possible deduct up to $2,500 in federal student loan interest payments depending on your income, how much you paid in interest and how you file taxes. Individuals can also deduct interest paid on up to $750,000 of their mortgage balance — or $375,000 if married and filing separately.

Another eligible deduction is medical expenses that exceed 7.5% of your adjusted gross income. While this isn't exactly debt relief, it can make more room in your budget to handle debt repayments.

Reductions for military service members

The Servicemembers Civil Relief Act (SCRA) sets special regulations for anyone who served in the US armed forces on active duty, and covers a period of time after that service ends. This includes interest rate caps set at 6% and restrictions on default judgements, foreclosures and repossessions.

Government-approved credit counseling

While the government doesn't offer credit counseling itself, the Department of Justice publishes a list of government-approved credit counseling agencies. That's because the government can require individuals to enroll in credit counseling before filing for bankruptcy.

Credit counseling agencies are nonprofits that offer free or low-cost financial advice and debt management programs. But in some cases, fees can be high. This list makes it easier to find an agency that's working in your best interest.

See debt relief options

Use the table below to compare companies that offer debt settlement, debt management and credit counseling services.

Name Product Costs Requirements
Accredited Debt Relief
Charges and fees vary by the company you're ultimately connected with
Must be at least 18 years old and a legal US resident; additional terms may apply based on services and products used.
This A+ BBB-rated service offers free consultations to lower your monthly payments help you get out of debt faster.
National Debt Relief
15–25% of total enrolled debt
Must have a legitimate financial hardship which is preventing the ability to pay creditors and a minimum of $7,500 in debt.
Get back on your feet with a top-rated company that works with multiple types of debt.
Freedom Debt Relief
Monthly payment based on enrolled debt, no upfront fees
Must have at least $7,500 in unsecured debt, have a hardship is preventing the ability to pay creditors, and live in a serviced state.
Freedom Debt Relief works to help people with unmanageable, unsecured debt get back on their feet.

Compare up to 4 providers

Bottom line

There are no debt settlement, management or credit counseling programs available directly through the government. But there are other types of debt assistance to help you manage your credit accounts.

Compare legitimate debt relief companies if what the government offers just isn't enough.

Frequently asked questions

Is there a government debt consolidation program?

The only government debt consolidation program available is the Direct Consolidation Loan for federal student loans. A Direct Consolidation Loan won't give you lower rates, but it can make you eligible for more repayment plan and forgiveness options.

Read about our picks for the best debt consolidation loans if you want to consolidate credit cards, personal loans or other types of private debt.

Are there any government debt relief grants?

No, the federal government doesn't offer any debt relief grants. The government only offers grants to individuals and businesses to fund specific projects or stimulate the economy — like the stimulus checks sent out to individuals during COVID-19.

More guides on Finder

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site