Are you an active-duty military personnel or a retired veteran and having trouble paying back debts? If yes, then you have a few options to get military debt relief.
How can you opt for military debt relief?
Here are a few options to get military debt relief and get hold on your finances. At first, you can go to the bases that offer counseling services at free of cost.
Opt for a military debt consolidation program
You can go to a free credit counseling with a consolidation company and if suitable, you can enroll in a consolidation program to solve your unsecured debt problems.
Go for a balance transfer card
Taking out a balance transfer card is also an option. You can take out a 0% balance transfer card with a fee of about 3%-5% on the transferred balance. While taking out the card, try to negotiate for about 18 months of the introductory period within which you can clear your debts.
Enroll in a settlement program
It is better if you take help of a reputable debt settlement company or a law firm to negotiate on your behalf for settling your credit card debts.
Take out a military debt consolidation loan
You can take out a VA personal loan from a lender who offers loans to veterans as well as active members of the military people. You can even take out a suitable debt consolidation loan with bad credit .
Usually you can take out not more than $40,000 and the interest rates charged are about 5%-36%, depending on your credit history.
It may be helpful for you to get such a loan if you have a VA loan on your home.
File bankruptcy
Filing a bankruptcy can be your last option to get rid of your debts. The active-duty military personnels as well as the disabled veterans have additional benefits over the non-military people. However, your security clearance may get affected to some extent due to a bankruptcy filing.
Why do you need a good credit history for security clearance?
When you apply for a security clearance or for security clearance renewal, your credit report is pulled. If your debt to income ratio is too much, your application may get denied. You have to apply for such clearance every 5-10 years.
There is a reason behind this eligibility criterion. It has been seen that having financial difficulties is one of the warning signs or major reasons for espionage.
If a military personnel can’t perform his/her duty at home, how will he/she perform duties to protect the country?
Military debt collection laws - What you should know
Debt collection is stressful for everyone and especially for military people since their security clearance may get negatively affected.
However, as a military personnel, you need to know about certain military debt collection laws under the FDCPA (Fair Debt Collection Practices Act).
As per the act, no debt collector can threaten you to reduce your rank or affect security clearance.
They Also can’t threaten you to contact the chain of command if you don’t repay debts.
You can seek legal help if you face any such issue.
Is there any other way of getting military debt relief?
Yes, you can get help from military debt forgiveness through SCRA (Servicemembers Civil Relief Act). You can take advantage of this military debt relief act if you qualify the eligibility guidelines.
Eligibility criteria:
- Active military member of USA
- Applicable to reservists and members of of the National Guard
- Starts from the joining date
- Continues till 30-90 days after the date of discharge from duty
What they cover:
As per the act, you can get a refund on the interest and annual fees, from all major banks along with credit card issuing companies, that you incurred before joining the duty. Even you can get a reduction in the interest rate on the loans you had taken out before joining the military. It includes credit card interest rates, mortgage rates, deferred income tax payments, suspension of professional liability insurance, and so on.
Scenario:
I am a retired military and I have USAA and Star Credit Cards amounting to about 32K debt. I have few other debts amounting to about 75K debt. I stay in Virginia. While doing research I have found that these debts can’t be settled. I was ready to start debt settlement until I came across this piece of information. So, I am a bit confused as to what to do. Can you tell me if debts can be garnished like child support, IRS, and Treasury Debt?
Solution:
The debts you have mentioned can be garnished in Virginia. However, only about 25% of your monthly earnings can be garnished. And, in case of student loans, only about 15% can be garnished.
It is a bit difficult to settle these cards. However, it is advisable you take professional help as they can negotiate in a better way to settle your credit cards. You can opt for a military debt consolidation or a DMP with 501(c)(3) non-profit credit counseling.
When you enroll in a consolidation program for military debt relief, discuss with them for an affordable monthly debt payment plan.
However, if your financial situation doesn’t permit you to even settle 75K debt, then the ultimate resort would be filing a bankruptcy.