Are you stuck in debt and feel out of options to clear your loans? Drowning in debt may have you looking for financial assistance from any support organization, including the federal government. You may have questions regarding government debt relief programs. For example, what forms of debt relief does the US government have? What are the qualification requirements for these programs?
The short answer is that you may benefit from limited government debt relief programs available in the US under certain specific circumstances. However, it’s important to understand that these initiatives will not likely eliminate all of your debt woes.
While the federal government does have assistance programs and grants, the application and processing details are complex. Your debts will not disappear magically.
Here is what you need to know.
4 government debt relief options
There are distinct government debt relief programs designed to assist individuals in debt. The government focuses more on helping those who have student and mortgage loan crises.
That’s because multiple households get into a fallout with their creditors for defaulting on these loans. Read on to know some forms of debt relief you may benefit from when you are exhausted by debt.
1. IRS Fresh Start Program
Sometimes your expenses may overwhelm your financial capacity, making it hard for you to settle loans and income taxes. The IRS Fresh Start Program has established the Fresh Start program that entails special rules and regulations regarding tax debt repayment. The initiative intends to provide a more convenient way to pay down the tax due.
The Fresh Start program has two subdivisions. They are Installment Agreement and Offer in Compromise. The Installment Agreement Program divides your tax debt into monthly installments that blend with your budget.
The Offer in Compromise Program is different. It permits taxpayers to agree with the Internal Revenue Service to reduce the original debt of tax to a lower amount they can afford to pay.
2. FHA Secure Loan Program
Recently, many homeowners with mortgages have been affected by the subprime credit meltdown. Fortunately, through the United States Department of Housing and Urban Development, the government has developed the FHA Secure Loan Program to assist individuals in debt.
This example of government debt relief programs protects homeowners facing possible foreclosures. It can help them refinance their subprime credit mortgages. You can request professional help if you need to know more about how the program can help you.
3. Government debt relief for student loans
You may be wondering why the government is concerned with assisting people facing a hard time clearing their loans. It’s because the government wants to reduce the financial burden on millennials, making it easier for them to afford down payments for homes and save more money. It will, in turn, help to increase the US economy.
You can reduce or eliminate your student loan repayment problems, courtesy of the federal student loan debt consolidation programs. It’s a suitable option if you’re servicing various student loans at the same time. The program enables debtors to bring together all federal student loans, creating a lower interest rate loan and allowing the debtors to pay subscriptions once per month.
Consider consolidating your loan if you’re facing difficulties in paying it. However, a deferment or forbearance plan is an ideal option if your debt problems are for the short term.
4. The Credit CARD Act of 2009
Some companies in the US create abnormal profit-oriented policies that increase the number of people in debt. This activity forced the legislature to pass a bill that became the Credit CARD Act of 2009. Although the Act doesn’t have powers to control credit card pricing or interest rates, it features other clauses to help debtors.
For instance, the law mandates creditors to issue a notice for interest rate increment 45 days before doing the changes. The Act also prevents creditors from increasing interest rates of individuals with a good credit standing.
Concluding words on government debt relief
The insights above help to answer the question of, “what forms of debt relief does the government have?” Although you may be eligible for some of the US government debt relief programs, you may not fully get out of debt. In that case, look for a reliable company to advise you on the best programs for your case and recommend additional alternatives if the government programs aren’t suitable.