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.
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.
There are several types of assistance that are designed to help veterans and service members who are struggling with loans through the VA.
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.
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.
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.
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.
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.
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.
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.
Use this table to compare companies that offer debt relief programs such as debt settlement, debt management and credit counseling.
These resources can also help you cut down on expenses, making it easier to get out of debt.
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.
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.
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.
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.
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