The Truth About Government Debt Help

You may have heard or read somewhere about how the Government can help with your debts problems by providing you with assistance in the form of grants, rebates and funding. The harsh reality that government help with debt consolidation does not exist. The government are just not interested in helping you out with your debts even if they wanted. They're having enough trouble sorting out the economies debts.

Misleading Advertising About Government Debt Help

However, the fact government debt management does not exist has not stopped opportunistic credit repair and debt relief companies to advertise that there is. There is a lot of misinformation being spun on the web and the TV about the availability of government debt consolidation and debt relief grants.

This terminology is used to mislead  people who are in vulnerable financial situations to think that the government is going to send them a check to eliminate their debts. These underhand ploys are used to reel these vulnerable people in with promises that there debts will eliminated. The reality is these type of companies sign people up to their debt management programs and charge them extortionate fees.

There are federal grants available in certain states however, these are available to pay off peoples consumer debts. These type of grants, of which there are many, are available for starting up a business are provide low interest home loans or rent rebates for people on low incomes.

So, as to make the point clear, there is no government help with unsecured debts such as  credit card debt or personal loans.

How The Government Could Assist You

Having cut through the misinformation that the government cannot bail you out of your consumer debt problem we can now address what they can assist you with. As pointed out their earlier are certain grants that can assistance you. However, these are only eligible for individuals or families on low incomes. Here are a few examples:

Making Homes Affordable Program

The US department of Housing and Urban Development has recently introduced assistance in the aftermath of the sub prime disaster. These programs have been designed to provide those people who need financial assistance with  their mortgage payments.

The Making Homes Affordable (MFA) Program is has two parts to it. One relates to mortgage refinancing which is facilitated through the Home Affordable Refinance Program are HARP for short.  The other part relates to modifying your mortgage to make it more affordable. This part of MFA is facilitated through the Home Affordable Modification Program.

As with any government assistance programs you have to see if you qualify. For further information about the MFA, and what they can offer visit the Making Home Affordable government website.

Federal Housing Association Loans

The US government does not actually provide you with a loan. The FHA loan program are government backed loans that are provided by lenders. Only people are meet the FHA guidelines will qualify for an FHA loan. They are available to help with who would not be able to afford a home through using the standard commercial loans. As the loans are guaranteed by the Federal government lenders are can afford to provide lower rates of interest rates and down payments.

The FHA loan program also offers assistance to people who want to buy a property that is in need of repair. The vast majority of commercial mortgage lenders are averse to lending to people who want to buy properties that are in a state of repair due to the risks involved. However, with the FHA 203(k) loan this is possible.

The FHA 203(k) loan enables the home buyer to finance the purchase of a distress property but also the cost of the repairs. This type of loan was introduced to create a win win situation for the buyer the government and society at large. For the buyer who is short on cash buying a distressed property is cheapest way of getting their foot on the property ladder. Making it easier access to funding to purchase distressed properties also helps the government to reach meet its targeting of increasing home ownership. Turning dilapidated  properties into attractive and livable homes only improves the quality of life in urban communities.

Debt Relief On Student Loans

Students who have taken out one or more government loans and can no longer afford to meet the payments may qualify for assistance through the government debt consolidation loan program. This program works on the same principle with any other debt consolidation loan. It enables you to group together all your different loans into a single monthly payment that has a lower rate of interest rate. It is important to point out that this government assistance program does not cover student loans provided by commercial lenders.

Other Means Of  Paying Off Your Debts

There can be strict criteria that you need to pass to qualify for government benefit and assistance programs and if you do not fall within that criteria then they are no use to you. However, there are other debt resolution alternatives that you can consider. Two popular methods used is debt management or a debt settlement scheme. Many get the two mixed up or think they are the same thing however, they are not.

Debt Management

This type of debt payment plan involves an informal agreement with your creditors to make your debt repayments more affordable. A debt management agreement will only covers unsecured debts, such as credit cards debts. It does not cover secured debts such as a mortgage where your house is used secured against the mortgage if you default.

A debt management plan can be set up on your own however, if you have several creditors it would be better to consider using the services of a reputable non profit debt management company. They will have the experience to negotiate with your creditors on your behalf to reduce your monthly payments and have them sign up to the plan. They often charge a monthly fee which is usually built into the payment you will make each month. They will take their prior to sharing out to your creditors.

Debt Settlement

The key difference between this and debt management is the amount of debt you have to pay back. With  a debt settlement you do not have to pay all your debt back because you either have insufficient funds or your income is too low cover all the payments. Therefore, debt settlement is an option for people who have large amounts of debts on a low income, have recently being divorced or made redundant.

A professional debt settlement company can be used to negotiate with you creditors on your behalf to reduce the amount you owe. Many creditors are willing to agree to this because they would prefer getting some money back than getting nothing at all. Depending on the persons circumstances debts can be reduced by as much as 50% through a debts settlement.

To recap on the above options. A debt management means that you will still have to pay all your outstanding debts but these will be made more affordable by reducing the interest charges. This option is suitable for people who can still afford to pay their debts but need a helping hand.

Debt settlements are an option who are facing financial hardship and can no longer afford to pay all their debts. Most creditors are willing to negotiate a reduction in the amount debt that is owed to at least get some of their money back.

Final Thought On Government Debt Relief

All the above options that you have read about will not make yours debts magically disappear. Some of these options will offer you assistance are provide with a structured plan to repay all or part of what you owe. The important part to remember is that its your responsibility to repay what you owe. To successfully get yourself out of debt you need to change your attitude towards money and debt.

To put yourself in the best possible position to eliminate debt from your life you need to manage your finances more effectively. This can be achieved through education. For example, setting a budget is essential to ensuring that you live within your means and save enough of your income to pay back your debts. Therefore, seek out classes on budgeting and money management.

Many debt settlement or management agencies also provide a credit counseling program that offer you advice about how to manage and save your money more effectively. As credit is becoming more widely used it is important to have a good credit score to ensure that future borrowing is more affordable. Therefore, eliminating debt and building a good credit history through budgeting and managing your finances effectively is the first step.

I hope you find this article on government debt help useful and informative.

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