- 7 min read
- Aid societies help service members in financial distress.
- Beware of lenders offering 'military' debt consolidation loans or easy to qualify bad credit loans.
- Check out civilian debt consolidation loans and other debt relief solutions.
Look for Debt Relief Alternatives for Military Personnel in a Hardship
Are you suffering from a financial hardship? Struggling with bills?
Some of the main causes of financial hardship are medical expenses, insufficient savings and emergency bills, loss of income, and divorce. On top of everyday challenges, military personnel faces a lot of stress. Moving frequently is not easy and many suffer from a loss of income.
Financial hardship can make people prey to scams and offers for easy solutions. Are there special debt consolidation programs? Beyond a special VA cash-out mortgage, there are no special or unique military debt consolidation programs. Some lenders make a point of creating advertising programs designed to appeal to current and retired military personnel, but their loans are the same as those offered to civilians- with the addition of patriotic stickers.
The good news is service members and their families have financial assistance options that are unavailable to civilians. Service members and their families can also take advantage of the debt resolution options available to civilians.
Financial Assistance for Service Members & Their Families
In some cases, a debt consolidation loan is not what a service member needs. If you need financial assistance for an unexpected medical bill, for example, or other urgent need, consider contacting your service's financial assistance organization. The American Red Cross also offers financial assistance to service members. The following are brief overviews of financial assistance programs for service members.
Army Emergency Relief
Army Emergency Relief (AER) is a private, nonprofit organization formed in 1942. AER funds are available to commanders of organizations with AER sections. The purpose is to provide emergency financial assistance to active and retired soldiers and their dependents when there is a valid need. AER funds made available to commanders are constrained only by the requirement of valid need.
According to AER, "emergency financial assistance is provided either as an interest-free loan, a grant, or a combination loan and grant, whichever is most appropriate, based upon the applicant's personal situation. A loan may be converted to a grant if it is determined that repayment is causing undue hardship."
Assistance is available to:
- Soldiers on extended active duty and their dependents.
- Members of the Reserve Components of the Army (National Guard under Title 10 authority and Army Reserve) who are on continuous active duty for more than 30 consecutive days and their eligible family members.
- Soldiers retired from active duty because of longevity or physical disability or retired upon reaching age 60 (Reserve Components) and their eligible family members
- Widows, widowers, and orphans of soldiers who died while on active duty or after retirement as cited above.
Typical needs for assistance are rent, car repair, emergency travel, utilities, food, funeral expenses, non-receipt of pay, medical, dental, and hospital expenses.
Navy-Marine Corps Relief Society
The Navy-Marine Corps Relief Society is a private, non-profit, charitable organization that was formed in 1904. Like Army Emergency Relief, the Navy-Marine Corps Relief Society provides emergency financial assistance to active and retired sailors and Marines. It provides assistance as either an interest-free loan, a grant, or a combination loan and grant.
Assistance is available to:
- Active duty and retired Navy and Marine Corps personnel
- Eligible family members of the personnel listed above
- Eligible family members of Navy and Marine Corps personnel who died on active duty or in a retired status Reservists on extended active duty
- Indigent mothers (65 years or older) of deceased service members who have limited resources and no family to provide for their welfare
- Ex-spouses "20-20-20" (unremarried former spouses whose marriage to a service member lasted for at least 20 years while the service member was on active duty)
- Uniformed members of the National Oceanic and Atmospheric Administration (NOAA)
Air Force Aid Society
The Air Force Aid Society is, like the other aid groups mentioned above for the other branches of the military, a private non-profit organization that provides worldwide emergency assistance to Air Force personnel.
Assistance in grants or loans is available for basic living expenses, medical care, dental care, funeral expenses, assistance with other emergencies, vehicle repairs, pay/allotment problems, disasters, assistance to surviving dependents.
Coast Guard Mutual Assistance
The Coast Guard Mutual Assistance is a non-profit charitable organization established to provide financial aid in grants or loans to the Coast Guard family, including:
- Active duty members of the Coast Guard
- Retired Coast Guard military personnel
- Civilian employees of the Coast Guard
- Coast Guard Reserve members
- Coast Guard Auxiliary members
- PHS officers serving with the Coast Guard
- Family members of the above
- Debt consolidation loans are not authorized.
The main purposes of Coast Guard Mutual Assistance are to provide financial assistance to members caught in an emergency, short-term financial situations beyond their control, including basic maintenance, sudden financial or personal loss, stranded while traveling, emergency travel, pay and allotment problems, travel advance and travel claim problems. General assistance may be provided when unexpected events or expenses cause a serious financial burden, and financial need is demonstrated. Examples include funeral expenses, travel problems, major car repair, problems with shipment of household goods, family in-home child care insurance, adoption costs when participating in the Coast Guard adoption program, and moving expenses.
American Red Cross
The American Red Cross also provides financial assistance as a partner with the Air Force Aid Society, Army Emergency Relief, Coast Guard Mutual Assistance, and Navy-Marine Corps Relief Society to provide financial assistance to applicants for emergency travel, burial of a loved one, and other assistance. Contact the Red Cross military call center at (877) 272-7337, or a local Red Cross chapter to learn how to obtain assistance.
Servicemembers Civil Relief Act
Under the Servicemembers Civil Relief Act (SCRA) protections exist for people on active duty or who recently completed active duty and had financial obligations. According to the Veterans Administration:
The SCRA provides numerous protections to active duty military members and reservists, or members of the National Guard called to active duty, and, in limited situations, dependents of military members. The SCRA is intended to ease the economic and legal burdens on military personnel during their active service by postponing, suspending, or mitigating various types of obligations, including mortgage loans. (50 U.S.C596)
The SCRA provides relief during and after active service under some circumstances, including:
- Restricting the maximum interest rate that may be charged on an obligation following a call to active military service.
- Providing certain relief related to evictions; requiring court approval for a non-judicial foreclosure unless the service member agrees in writing to allow the foreclosure.
- Providing protection to a service member who obtained a mortgage after entering active duty, but who is not readily available (especially due to an overseas assignment) to defend him or herself against judicial proceedings.
The SCRA is intended to cut the obligations of a service member who enters active duty by minimizing the effect of his or her reduced income. SCRA applies to credit card debts, car loans, mortgages, personal loans, and other similar obligations and liabilities incurred by the service member (or jointly with his or her spouse).
Finding Debt Relief for Military Personnel and Veterans
First of all, there are no easy solutions for people facing financial hardships. It is essential to do your homework and not rush into any program that sounds too good to be true.
Beware of predatory lenders using patriotic symbols in their advertising that promise loans for service members. If you suffer from financial distress due to an unplanned event, contact the appropriate relief society for your service branch and ask about a grant or loan for your specific need.
At the same time that you are looking for short-term relief, you might be looking for debt consolidation or debt relief program that fits your situation. Check out Bills.com Debt Navigator for an online, instant analysis of your debt resolution options. The Debt Navigator is a no-cost, no-obligation, no-nonsense tool that will help guide you to an appropriate choice that fits your needs.
Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q2 2022 was $16.15 trillion. Housing debt totaled $11.71 trillion and non-housing debt was $4.45 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1.739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in West Virginia, 37% have any kind of debt in collections and the median debt in collections is $1459. Medical debt is common and 24% have that in collections. The median medical debt in collections is $553.
While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.