Military families struggling with debt have several options for relief, including debt consolidation through credit counseling or loans, protections under the Servicemembers Civil Relief Act, student loan repayment programs, and debt settlement as a last resort. These options can create lower interest rates, longer payment periods, and reduced overall payments, but caution should be exercised to ensure legitimate lenders and legal advice sought when necessary.
There are several options for specially planned military debt relief for military families struggling to pay their monthly bills. There are debt consolidation options through credit counseling or a loan that pays off other types of debt, both of which generally create a single, lower-interest monthly payment. The Servicemembers Civil Relief Act exists to create restrictions on interest rates and other actions taken against military families, typically regarding mortgages. Another specific option is student loan repayment programs that are available when enrolled during enrollment or re-enrollment. Debt settlement is a last resort that can eliminate debt entirely, but creates a negative impact on personal credit scores and potential problems with military stature.
Military debt consolidation through credit counseling is a form of military debt relief. This type is specifically geared towards households with multiple monthly debt payments for unsecured debts, such as credit cards. Counselors work with lenders on partial debt forgiveness through reduced interest rates or previous balance agreements. Benefits include a longer time to pay off debt, revised high interest rates, and a monthly payment, all of which create lower overall payments than multiple individual payments. A military member’s credit score can be assisted by such a program with regular payments as long as the due dates are met.
Consolidation loans are another option for military debt relief. The individual should, however, ensure that the interest rate is comparable to other unsecured loans available. Caution should be exercised, as sometimes lenders will specifically use the word “military” in their title or when describing the loan when no such affiliation exists. When valid, these loans should have a lower interest rate than high-rate credit cards relieved with such a plan, saving you money in the long run.
The Servicemembers Civil Relief Act (SCRA) creates special protection for active duty or recently completed active duty military personnel, along with their families. The main objective of the SCRA is to postpone or suspend certain types of debt, including mortgage loans. Services include restrictions on the maximum interest rate chargeable, eviction measures or legal proceedings in connection with a mortgage. Members of the military are advised to seek legal advice when using this benefit.
A student loan repayment program can help with paying off student loans if someone is considering joining the military. The program must be known in advance as it must be requested at the time of enrollment or re-enrollment. 15% of the loan balance is paid up to a maximum, and each branch of the military has a different maximum. Certain pass scores are also a requirement on qualifying tests to receive this type of military debt relief.
If you want more military debt relief than the types discussed above, you might want to consider debt settlement. Quite simply, someone who signs up for debt settlement is choosing to stop paying their debt. While this is considered complete debt elimination, this method harms the individual’s credit rating and counseling should be sought so that the individual can understand both the implications on future credit needs and his or her status with the military.
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