When it comes to credit card debt relief, it's important to dispel a common misconception: There are no government-sponsored programs specifically designed to eliminate credit card debt. So, you should be wary of any offers claiming to represent such government initiatives, as they may be misleading or fraudulent.
If you cannot pay off your debt
You can apply for a Debt Relief Order or Bankruptcy Order if you cannot pay your debts because you do not have enough money or assets you can sell. If you cannot pay off your debts, you can be made bankrupt.
Keep in mind that the government doesn't offer grants to help Americans pay off consumer debt from things like credit cards. It does, however, offer financial support for Americans struggling with a range of tough financial situations.
Freedom Debt Relief at a glance
Minimum debt required to enroll: $7,500. Types of debt eligible for enrollment: Unsecured debt, including credit cards, medical debt, personal loans, private student loans, collections, lines of credit, repossessions and payday loans.
Will likely hurt your credit score: Like with any debt settlement company, working with Freedom Debt Relief will typically make your credit score drop at first. Depending on your situation, it could be a significant tumble.
Hardship programs are nearly identical to the debt management programs offered by nonprofit credit card agencies like InCharge Debt Solutions. Both programs make it easier to afford the monthly payments by lowering interest rates and eliminating fees.
The government does not offer "free money" for individuals. Federal grants are typically only for states and organizations. But you may be able to get a federal loan for education, a small business, and more. If you need help with food, health care, or utilities, visit USA.gov's benefits page.
While there are no government debt relief grants, there is free money to pay other bills, which should lead to paying off debt because it frees up funds. The biggest grant the government offers may be housing vouchers for those who qualify. The local housing authority pays the landlord directly.
In general, most debt will fall off your credit report after seven years, but some types of debt can stay for up to 10 years or even indefinitely. Certain types of debt or derogatory marks, such as tax liens and paid medical debt collections, will not typically show up on your credit report.
Types of debt that cannot be discharged in bankruptcy include alimony, child support, and certain unpaid taxes. Other types of debt that cannot be alleviated in bankruptcy include debts for willful and malicious injury to another person or property.
Updated September 5, 2019 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence.
The short answer is yes, credit card debt forgiveness can negatively affect your credit score. However, the impact depends on various factors, including your current credit score and the specifics of your debt settlement agreement.
The federal government doesn't give hardship grants to individuals. Instead, grants of this nature go to state and local governments, colleges and universities, law enforcement agencies, research labs, nonprofit organizations and businesses.
A Short Summary of Federal Grants
A grant is a way the government funds your ideas and projects to provide public services and stimulate the economy. Grants support critical recovery initiatives, innovative research, and many other programs listed in the Annual Publication of Assistance Listings (APAL).
Key Takeaways. There aren't any free government debt relief programs for credit card or personal loan debt other than bankruptcy.
We have a range of policies and programs to accommodate customer hardships. For customers who let us know they are being impacted, we are here to support and work with them. We are offering assistance to consumers and small business owners, including waiving fees or deferring payments on credit cards or auto loans.
Lenders apply debt forgiveness in several ways, including through directly negotiated settlements or government programs. You can also approach industry professionals such as debt counselors to assist with repayment plans. However, it's important to keep in mind that debt forgiveness is relatively rare.
National Debt Relief does not charge any fees until you approve of the settlement agreement and your debts are settled. There are also no fees for signing up or cancellation. If and when your debts are settled, the average client pays a fee of 15% to 25% of the total debt enrolled as part of your monthly payment.
You May End Up with More Debt Than You Started
That negotiation is often not a streamlined process and can take quite some time. Stopping payment on a debt means you could face late fees and accruing interest.