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Military and veteran debt relief

Government debt relief generally covers VA loans — but there are other options.

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Editor's choice: National Debt Relief

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There are a few government programs meant to help veterans struggling with debt backed by the Veteran's Administration, or VA. But these debt relief programs rarely extend to credit card bills and other types of private debt. However, there are some programs and protections that can make repaying debt easier both during and after your service.

VA extends COVID-19 debt relief to veterans

The VA has suspended all actions on debts until the end of 2020 due to COVID-19. If you have outstanding debts with the Treasury Department, you can either suspend your repayments for 90 days or extend your terms to lower the monthly cost. Those that have been affected by natural disasters, such as hurricanes or wildfires, may also qualify for additional assistance.

Veterans with benefits debt should call the debt management system at 800-827-0648 for more information. For healthcare debts, call the VA Health Resource Center at 866-400-1238.

Debt assistance for veterans and service members

There are several types of assistance that are designed to help veterans and service members who are struggling with loans through the VA.

VA agreement to pay indebtedness

If you receive a VA medical bill you can't pay all at once, you can request a payment plan that divides it up into monthly repayments over around three years without interest. You can apply by filling out VA form 1100 and submitting it to your closest VA medical center. You're required to submit this form within 30 days of receiving the bill.

VA compromise offer

If you can't afford a payment plan, you can also submit a compromise offer. With a compromise offer, you request to settle your account in full at a discount.

You can apply by writing a letter to the VA explaining your situation. Include the amount you can afford to pay in full and a financial status report, or VA form 5655. Mail all of your documents to the following address:

US Department of Veterans Affairs
Debt Management Center
PO Box 11930
St Paul, MN 55111

You can also submit them via fax to 612-970-5688. If approved, you have 30 days to make the payment.

VA waiver

The VA also offers waivers to veterans struggling to pay off VA debt. The VA will either waive all or part of your debt and will stop collections if you get approved. The application is the same as the VA compromise offer application. But you also have the option to make a case for yourself in an oral hearing.

To qualify, you must be a veteran, payee or beneficiary or representative acting on part of the person who has the debt in their name — including a representative of an estate.

VA cash-out refinance home loan

In addition to regular mortgages, the VA backs cash-out refinance home loans. You can use the loan to refinance a conventional home loan into a VA-backed home loan. Or you can use it to pay off high-interest debt at a low rate and low monthly repayments.

To qualify for VA cash-out refinancing, you must be eligible for a VA mortgage, meet the VA and lenders' credit and income requirements and live in the home you want to refinance. You can apply through a VA home loan provider after filling out a certificate of eligibility on the VA's benefits website.

Military student loan repayment programs

There are several public and private forgiveness and deferment programs for service members and veterans. Members of the military can defer their loans while on active duty. And you may qualify for partial or even full forgiveness when you get back.

Most private debt relief companies don't work with federal student loans — and some don't even accept private student loans. Read our guide to military student loan assistance to read about your full range of options for that type of debt.

SCRA protections

The Servicemembers Civil Relief Act (SCRA) provides protections for service members while you're on active duty and shortly after you return home. Under the SCRA and while you're in the service, lenders legally can't charge you more than 6% interest on debt you took out before your military service. This extends until 180 days after your service ends.

The SCRA also includes protections against default judgements, repossessions and foreclosures. Rented homes and storage facilities are also protected.

Debt relief options

While there are a few debt relief options for service members and veterans, they can be limited. If you have debt that isn't covered by the VA or SCRA, you might want to consider one of these options.

  • Debt consolidation. Ideal for when you owe less than 50% of your salary, debt consolidation involves moving your debt into a new loan or credit card with lower rate and manageable terms. New credit cards, including military credit cards, can come with 0% APRs for the first year or so.
  • Credit counseling. Sign up to have an expert to go over your finances, pinpoint the source of the problem and come up with an action plan when you don't know where to start. Nonprofits often offer this service for free.
  • Debt management. Have a credit counseling agency negotiate with your creditors for lower rates and fees when you're struggling with the monthly cost, usually for a fee.
  • Debt settlement. Sign up to have professionals negotiate down your debt by around 30% in exchange for a one-time payment. Save this for emergencies. It can be difficult to afford unless you stop paying your creditors, which hurts your credit and puts you at risk for lawsuits.
  • Bankruptcy. Chapter 11 bankruptcy wipes out most of your debts in cases of severe financial hardship, while Chapter 13 gives you a new repayment plan that fits your current budget.

See debt relief companies

Use this table to compare companies that offer debt relief programs such as debt settlement, debt management and credit counseling.

Data indicated here is updated regularly

Name Product Costs Requirements
National Debt Relief
18–25% 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 debt relief 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 is a debt settlement company that works to help people with unmanageable, unsecured debt get back on their feet.
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.
Pacific Debt
15%–25% of total debt enrolled. Fees vary by state of residence.
Reside in a state where PDI’s services are available and have $10,000+ of debt to enroll
Consolidated Credit
Fees regulated by client's state of residence, can range from$0 to $69 with an average monthly fee of $35. No upfront or contingency fees.
Debt must not be payday loans or secured loans.
This debt settlement alternative can help you find a path to financial freedom.
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Compare up to 4 providers

Debt relief alternatives for veterans and service members

These resources can also help you cut down on expenses, making it easier to get out of debt.

Government benefits

Members of the military get access to a wider range of benefits than your average American. This includes VA-backed home loans and grants, healthcare, childcare assistance, free tax preparation and more. You can read more about the opportunities available to you on the USA.gov military assistance page.

Private grants

Some private organizations like Veterans of Foreign Wars offer grants to help military families cover basic expenses. You generally need to have served in the military and face financial hardship to qualify.

Local assistance programs

There are many community organizations that provide additional assistance to service members, veterans and their families. You can look for programs available to you by searching on the National Resource Directory.

Other local programs like mutual aid networks and community pantries can also help cut down on costs.

Bottom line

A handful of programs can help you manage VA and government-issued debt. And a VA cash-out refinance home loan can help you with other bills — as long as you already own a home. But otherwise, there aren't many debt relief resources specifically for service members and veterans.

Get a rundown of our picks for the best debt relief companies to learn what your other options are — and what to avoid.

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