Government Aid in Free Debt Consolidation

Debt consolidation can be a difficult process, but there is some government aid in free debt consolidation available to those who are struggling with unmanageable debts.

Is consolidation a good idea?

Debt, if not managed properly, can have an adverse impact on your life. Your ability to acquire credit is determined, in part, by how you have handled credit in the past. If you have made late payments or missed payments on your current credit, it may reflect badly on you in the eyes of a new creditor.

When you overextend yourself on your available credit, you can find yourself in a financial bind. You may begin to wonder how to keep on paying the minimum payment on your credit card bills while still having enough money for the necessities of life. Consolidation can provide an option that preserves your credit by allowing you to combine all your debts into one lower monthly payment. Many lenders, both public and private, offer various forms of loan consolidation to help you get your debt under control. Government aid in free debt consolidation may provide one of these options.

There are a few options to pursue when you are in over your head in debt, but none of them are a quick and easy fix. When you are struggling to pay your debts, your best option may be to find a credit counseling service to help you get out of debt, file for personal bankruptcy or obtain a loan to consolidate your debt. Of these choices, the only one that will not ruin or badly affect your credit is to obtain a loan to pay off all the old debts. This type of loan is known as a consolidation loan.

The government has made a few options available to the public that can help you in obtaining debt relief. Homeowners can seek to refinance their homes through the FHA, thus lowering their monthly housing costs and making more money available to help pay off debt. The major program offered by the FHA is called Hope for Homeowners.

A similar program is run through the Veterans Administration. Veterans can contact the VA and find out about options such as home equity loans and loans against their life insurance policies. By refinancing an existing mortgage, veterans or soldiers are often able to get some of their home equity back as cash that can be applied to pay down your debt. By making this choice, you can essentially consolidate all of your debt into your home loan.

Finally, farmers can apply for loans through the local Farm Service Agency.

Another program that can reduce current debt exists in the form of government aid in free debt consolidation for insured school loans. These loans can be consolidated under the Department of Education and this free consolidation often yields a loan with a lower interest rate than the original loans. This will lower monthly student loan payments, freeing up money to pay down other debts. Even if a borrower has only one loan, they can renegotiate the interest rate on that loan and find some debt relief. The government also offers an income contingent repayment plan and deferment and forbearance options that can put your payments on hold for a period of time if you are truly struggling to make ends meet.

The final set of programs the government has made available to provide debt relief for the public include grants from government agencies. These grants not consolidation loans, but can help you manage and cope with your debt load nonetheless.

Many agencies have money set aside to be distributed to citizens that are under economic hardship and not able to pay their debts. These programs include grants to people who were in an emergency situation, such as a flood or a hurricane, and grant programs for people that have large medical bills they can’t pay. These grants may provide debt relief for the millions of citizens whose unmanageable debt resulted from medical bills not covered by insurance or from other unforeseen bad luck.

Applying for a government grant, if you are eligible, may be a better choice than applying for a consolidation loan. A loan must be repaid over time at a defined interest rate and within a set period. Grants obtained from government programs are money that never has to be paid back. Grants are more difficult to get than a loan, but if you do qualify, this can offer an easier solution to your debt problem.

When being considered for a grant for medical bills, you must be able to show that you don’t have the ability to repay your debts on your own. Each grant applicant is investigated by a Social Services agency to verify the truthfulness of the application and to verify the debt amounts.

Regardless of which program or loan offer you choose, the government does have programs to help you consolidate your debt and obtain debt relief.

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