Government Debt Relief - Is It An Option?

Government Debt Relief

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  • Government debt relief programs are limited, but options exist.
  • The Government also helps protect you against debt collectors.
  • There are non-government programs to help you get out of debt.

Tips and Advice to Find Government Debt Relief and Grants

Drowning in Debt? Not sure how to get out of debt?

Do you think that the government is the best place to turn to get out of debt? While it is true that there are some limited government debt relief programs, don’t count on the government to bail you out.

Does government debt relief exist? If so, what exactly are your options?There are some misconceptions about what the government can actually do to provide debt relief. In short, the federal government does have assistance programs and grants, but there is no such thing as a straight-forward debt relief program issued by the government where your debts disappear magically.

The US government has racked up close to $20 Trillion in debt...that is serious debt. Seriously, that looks like a steep hill to climb.

Government Debt:Total Public Debt

 Source: U.S. Department of the Treasury. Fiscal Service, Federal Debt: Total Public Debt [GFDEBTN], retrieved from FRED, Federal Reserve Bank of St. Louis;, August 27, 2017.

It is important to get a grip of your debt situation. In general, any government program will aid those in a hardship, although not everyone in a financial hardship will qualify for a government debt relief program. It is good to keep in mind that government debt relief is not a solution for many debt problems, especially with unsecured debt, such as credit card debt. However, it is also a good idea to know your rights and what type of help is available.

In order to understand how the government can help you find the best debt relief solution for your personal situation learn about:

  • Handling Debt and tips from the government
  • Government Debt Relief for Different Types of Debt (Student, Mortgage, Medical/Hardship)
  • Government Protection Against Debt Collectors and Lawsuits
Suffering from financial hardship? Don't wait for a magical Government Debt Relief Program

Many consumers are falling behind on their credit card debt. Unfortunately, there is no magical Government Debt Relief program. If you are in a financial hardship and have unsecured debt, then Get a free debt consultation from a debt provider.

Pre-Debt Relief: Tips From the Government

While the government is not managed like a household there are certain principles that must be maintained, including keeping a budget, balancing your budget, bringing in income, taking out debt that can be serviced, and building equity.

Naturally, you don’t have the luxury of printing out money, issuing a bond, or managing interest and inflation. However, if a government does not handle its finances prudently it will find itself in a state of insolvency.

Here are some useful tips to manage debt:

  1. Keep a budget: If you need help setting or managing a budget, then check out Budget Guide.
  2. Balance Your Budget: If your income isn’t covering your expenses, then you can try to cut your expenses, or alternatively increase your income by taking an extra job, or working extra hours.
  3. Choose Debt Wisely: If your income isn’t sufficient to manage your expenses, then a loan can be a way to bridge the gap. Try to focus on healthy debt that builds your net worth, such as mortgages and student loans, just as the government takes out loans to build infrastructure or long-term national projects.

If you plan your finances, monitor your budget, take out healthy debt, build up emergency savings, and then you can possibly avoid getting into debt trouble. Even if you are suffering from a financial hardship and racked up debt, good financial habits will always come in handy.

Government Debt Relief for Different Types of Debt

There are specific government programs to help consumers in debt. Since mortgages and student loans are two of the biggest household debts, it is no wonder that the government has intervened to help in times of crisis.

 Government Debt Relief for Mortgages

One of the most popular debt relief programs for mortgages was the Making Home Affordable program. This included various foreclosure alternatives including:

  • HARP Mortgage - The HARP mortgage allows underwater borrowers who lost equity in the Great Recession to refinance into lower interest rates and affordable payments. The HARP program has helped over 3.4 million borrowers. The HARP program was recently extended until 2018, however it does have eligibility requirements including Fannie Mae and Freddie Mac loans originated before June 1, 2009.
  • HAMP Modification - The HAMP modification expired, but set the way for lenders to renegotiate government backed loans into affordable payments. With the end of the program, lenders are expected to pick up the slack and offer their own modification programs.

Government Debt Relief for Student Loans

The second biggest consumer non-housing debt in America is student loans. As of Q2 2017 Student loan debt had reached $1.34 billion. Student loan balance tripled in the last 17 years (between Q1 2003 - Q2 2017) and now comprises more than 32% of all non-housing debt.

Student loans can be a heavy financial burden, making it more difficult to save money, build up a down payment for a home, or just make ends meet. Currently, most student loans today are federal student loans, which are often eligible for various government student debt relief programs.

If you are struggling with your federal student loans, then you should consult your loan servicer. Also, refer to the excellent student aid government website

If you are having short term problems, then consider a deferment or forbearance plan. However, if you are struggling with payments, then consider a loan consolidation, loan extension, Income-Driven Plan, Income-Sensitive Plan. There also exists certain loan forgiveness plans.

Government Debt Relief for Medical and Hardship Situations

While there is no universal program to help with personal debt, there are a number of local programs to help people in financial hardships. One of the main sources of financial hardship is due to illness and medical bills. Not only do people lose income, but medical debt can be very expensive. Left with no recourse, many people use up their savings and even run up credit card debt to pay medical bill and get medical care.

The government has a website to help with medical and other bills. You can learn about state and federal health insurance programs that may offer help with paying for bills or payment options. Here are some other areas that the government can offer relief: Paying for Telephone Service, Home Energy Bill, Medical Bills, Prescription Drug Costs, and Welfare or Temporary Assistance for Needy Families (TANF).

The government also provides information and programs about medical debt on their website . As the saying goes: "an ounce of prevention is worth a pound of cure." While much of the information does not help with past debt, by arming yourself with knowledge, it may be possible to avoid some of the medical debt.

Talk to Your Creditor

Anyone with secured debt (mortgages and auto loans) should speak to their creditor as soon as they have a problem. Try to work out a plan that allows you to make your payments on time.

Government Protection Against Debt and Debt Collectors

One of the biggest government debt relief programs is the legal protections that it offers. This includes the Fair Debt Collection Practices Act (FDCPA), which limits the actions of debt collectors. If you are behind in payments, then the last thing you want to face is harassment from a debt collector. The FDCPA prohibits debt collectors from very specific behavior including the use of abusive or threatening language, and threats of arrest. 

Another area that the government offers debt relief is through collection laws and statute of limitations. These offer you protection in the case of a lawsuit and a potential judgment. These laws are both state specific and relate to the type of debt and assets.;

One final area that the government offers debt relief is through a court approved bankruptcy, either a Chapter 7 liquidation, or a Chapter 13 court payment plan. Bankruptcy is generally considered a last-resort solution and not many people can qualify for a Chapter 7 bankruptcy or complete a Chapter 13 bankruptcy.

Good News: Alternatives to Government Debt Relief Options

The good news for many people in debt is that there are a number of debt relief options that don’t include the government. There are solutions for people in good financial shape and for those in a financial hardship and struggling with credit card debt.

Anyone with a good financial situation and good credit should look at their budget, assets, and credit. Perhaps paying off debt more aggressively or taking out a debt consolidation loan will solve your problems.

However, if you are struggling to make your minimum payments, and want to focus on paying off your debt and not your credit, then consider a debt settlement program. Fortunately, the industry is regulated by the government, so you never have to make any upfront payments. Private industry, with firms such as sister company Freedom Debt Relief, now offer you debt relief in cases where the government cannot help.

Need Help Finding a Non-Government Debt Relief Tactic

Is Government help not enough? If you are still not sure which debt relief tactic is best for your situation, then check out innovative tool, the Debt Navigator. With just a few questions and a soft pull on your credit, you can get a free personalized solution to help you get debt free.

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  • L
    Jul, 2020

    Your credit determines your financial life. Ever since the pandemic started, my credit went downhill. I maxed out all my credit cards in April totaling $8685 in credit card debts. I called my creditors and told them what I am dealing with and am in a COVID hardship program with each of them What am I going to do when the leniency from the creditors ends?

    • 35x35
      Oct, 2020

      Lucas, you ask a great question. I assure you that you are not the only one who will be facing this situation and I commend you for thinking in advance about how best to deal with the situation you know is coming.

      The best advice I can give you is to not panic. You will have options available. A lot will depend on what you can afford to pay each month, when the time arrives that your creditors are being less flexible and demanding a significant monthly minimum payment.

      If you are unable to pay all your minimum It could be that a program that helps people in financial hardship may be a good choice, whether bankruptcy, a debt management program, or debt settlement.  You can start looking at the different debt relief options, so you have time to consider the pros and cons, then finalize your decision once the time comes.

      You started your question commenting on the importance of credit.  Don't stress over that. It is easier to rebuild credit than to pay off debt. Once you get the debt solution in place you can formulate a plan to improve your credit score.

  • A
    Api munokoatini,
    Jun, 2020

    I'm not sure how much I owe but would l love help an to better my credit rating.

    • 35x35
      Jul, 2020

      Api, what kind of debts you have? Are you behind on any? Do you have steady income? What is your current credit score? When is the last time you reviewed your credit report?

      Those are some of the question that need to addressed to figure out what options are available.

  • ,
    May, 2019

    Thanks for the tips!

  • JA
    Hershey, PA,
    Jun, 2014
    Are there any cash loans for bad credit that can help pay a car loan?
    • BA
      Jun, 2014
      Not many lenders will want to lend you money if you cannot afford your existing car payment. Speak to your auto finance company about refinancing the loan so that it has a longer term, which will lower your monthly payments. The downside to this strategy is the lifetime cost of the loan will be higher.
  • DC
    Freeport, NY,
    Feb, 2014
    I will love to recive in spanish this information I understood but some time I kind express fluent english... thanks You are great and gave me hope again... thanks