Veteran Debt Relief Grants: Your Guide to Financial Assistance Programs 2025
- Grants are just one of several forms of veteran debt relief.
- You may be eligible if you served in the military, even if you didn’t serve in a combat zone.
- The nature of your discharge may affect your eligibility.
- Other forms of financial assistance include pensions, loans, GI Bill education benefits, and disability compensation.
- Credit counseling, debt management plans, and negotiated debt settlement are all possibilities for debt relief.
- Veterans debt relief is available from the government, nonprofits, and private companies like Freedom Debt Relief.
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For veterans with debt, lots of help is available. Government, nonprofit, and private organizations offer a range of programs to help you get your finances back on track.
Veteran debt relief grants don’t have to be repaid. That’s just the tip of the iceberg of the debt relief options open to veterans. You’ve got access to pensions and other benefits, housing assistance, education, counseling, debt settlement, and even legal protection.
In other words, debt relief comes in many forms. Debt relief may not be something that directly pays off your debt. Anything that improves your income or reduces your expenses could free up more money to put towards paying off debt.
Being open to the different forms of veteran debt relief means there can be a broader range of assistance available to you. This article will introduce you to the possibilities, to help you find the type of debt relief that fits your situation.
Government-Sponsored Veteran Debt Relief Grants
In return for your service to your country, the government provides different types of financial assistance.
Here are some key ways the government offers financial help for veterans, along with examples of programs worth looking into.
The Veterans Administration
The Veterans Administration (VA) is the primary organization that coordinates benefits for U.S. military veterans. Examples of financial help include:
Military pensions
Disability compensation
Housing assistance
Grants for adaptive homes and vehicles
GI Bill education and training funding
You may find ways to improve your income or reduce your expenses, which could give you some breathing space in your budget to attack debt.
If you have VA debt from a previous loan, benefit overpayments, or medical co-payments, you can apply to the VA for debt relief by filling out VA Form 5655. You’ll provide information about your income, expenses, and other financial circumstances. The VA will review your situation and decide if you qualify for a modification of your payment schedule. They may reduce the amount you owe.
You might be wondering if veteran debt relief programs will affect your VA benefits. It’s possible that some programs will. If you receive VA benefits and have a VA debt, you may have to give up some or all of those benefits until the debt has been paid. Another possibility: The VA may approve another repayment or debt relief option.
The Department of Defense
If you’re an active service member, the Department of Defense (DoD) provides information on financial assistance and other benefits through the website MilitaryOneSource.mil.
In addition, the DoD has specific official relief organizations for different branches of the military:
Army Emergency Relief
Navy-Marine Corps Relief Society
Air Force Aid Society
Coast Guard Mutual Assistance
Can veterans with less than honorable discharge qualify for debt relief programs?
Having less than an honorable discharge could affect your eligibility for government veterans benefits. In particular, a dishonorable discharge often bars you from receiving those benefits.
Even with a dishonorable discharge, you may be able to find help. You can try nonprofit organizations or private debt relief or credit counseling firms.
State-specific programs
States typically have their own departments of veterans affairs that coordinate veterans assistance programs there.
In some cases, those programs provide grants to nonprofit organizations that support veterans in the state. Programs sometimes provide support directly to veterans.
For example, New York State's Department of Veterans' Services provides up to $2,000 in emergency housing assistance. California offers property tax exemptions for veterans.
These programs vary widely from state to state. In some cases, your city or county may also offer veterans programs. When you have to choose between paying off debt and meeting other expenses, any form of financial support can help the numbers add up.
In short, while the federal government provides a significant amount of support to veterans, don't limit yourself to that one source. You may find additional help locally.
When applying for any veterans program, be ready to provide a copy of your form DD214. This form details the character of your discharge from the service. You may also need other information about your service record, which you can obtain through the National Archives. You can make this request online through the eVetRecs website.
Nonprofit Organizations Offering Veteran Debt Assistance
Many nonprofits can help with counseling, financial assistance, and other programs for veterans struggling with debt.
Here are some examples:
The Bob Woodruff Foundation provides grants to organizations that help veterans. Their emphasis is on access to food, housing, employment, and healthcare.
Disabled American Veterans (DAV) helps veterans fill out claims for benefits. It also holds job fairs to help veterans find employment and provides free rides to medical appointments.
The Gary Sinise Foundation’s Restoring Independence Supporting Empowerment (RISE) program builds specially adapted housing for wounded veterans.
Operation Homefront has a Critical Financial Assistance Program that helps veterans who are having trouble making ends meet.
USA Cares provides direct emergency financial assistance to veterans.
Warrior Rising provides funding and guidance to veterans starting their own businesses.
Thousands of other local and national nonprofit organizations are dedicated to helping veterans. They specialize in helping with various types of needs.
Before applying to an organization, do a little research. Find out about the organization's reputation. When in doubt, steer toward older, more established organizations instead of start-ups.
Research the programs and areas of emphasis. Try to find ones that are aligned with your situation, based on your service, physical abilities, and financial needs.
Generally, there's a process to follow when applying for aid. Be patient, learn the process, and provide whatever information is required. Also ask about the normal response time so you'll know when you should follow up.
As in the military, there's generally a reason for this type of process. Doing things by the book will improve your chances of success.
Specialized Debt Relief for Disabled Veterans
If you were disabled as a result of your military service, you may have special financial needs. Several nonprofits provide financial assistance to disabled veterans. Still, the best place to start is by finding out about VA disability benefits.
Benefits are typically based on the severity of your disability and how it was incurred. The VA assigns a disability rating based on the degree to which your condition limits you. If you have more than one medical condition, the impacts of these conditions are combined to calculate your disability rating.
The VA provides a disability benefit based on this disability rating and considers whether you have family members who are financially dependent on you. Here’s how to file with the VA:
Start by filing a disability claim, which you can do online. You'll need information from your medical records and supporting statements from people familiar with your situation.
Be as thorough as you can. It's not just a question of whether you get approved. The size of your benefit may depend on making sure the VA has all the relevant information.
Be prepared to wait after filing. The VA takes about 107 days to make a decision about disability claims, and they may request more information. The faster you can provide information, the sooner the application can move along.
The time and effort could prove well worth it if your disability benefit allows you to pay off debt and meet your other expenses.
Alternative Debt Relief Options for Veterans
So far, we’ve detailed financial assistance from grants, pensions, and disability benefits. You can find other types of debt relief to make your debt payments easier to manage.
Here’s an overview of these types of debt relief.
Servicemembers Civil Relief Act protections
The Servicemembers Civil Relief Act (SCRA) provides some protection to veterans when military service limits their ability to meet their financial obligations.
Debt relief available under the SCRA may include:
Reduced interest rates on existing debt
Deferred income taxes
Eviction prevention
Termination of leases
Repossession prevention
The SCRA is wide-ranging, and it’s a good idea to seek help from a military legal assistance office. Talk to someone familiar with the law and your circumstances to figure out if the SCRA can help with your financial problems.
VA debt payment options
If you have a VA mortgage, some debt relief options might make those payments more manageable:
A repayment plan with reduced monthly payments
Debt settlement, through either a compromise offer or a debt waiver
A VA interest rate reduction refinance loan can lower the interest rate you're currently paying on your mortgage
Even if your mortgage isn't a VA loan, a cash-out VA refinance loan might allow you to refinance other debts at a lower interest rate, and on a repayment timeline that works for your budget.
How long does the application process for VA debt relief grants typically take?
VA debt relief is more likely to be a loan, a reduction in payments, or a waiver of some of the amount owed, rather than a debt relief grant. The time this takes varies depending on the complexity of your case and VA staffing issues.
Once you request debt relief from the VA, you should immediately receive written confirmation that the request has been made. After that, the VA will notify you of the date of any hearing, if applicable, or of the decision in your case.
Credit counseling
Credit counseling from nonprofit credit counseling agencies could help you get a handle on your finances if you agree to complete their debt payoff program. They may:
Review your financial situation
Set up a debt management plan for you
Negotiate with your creditors to lower interest rates
These services are generally applied to unsecured debt, which includes credit card debt, medical debt, and personal loans.
Credit counselors typically charge a fee for their services. The fee amount is based on the counselor and on the services you need.
Negotiated debt settlement
Another debt relief tactic available to veterans is debt settlement. Debt settlement is a negotiated agreement for a creditor to accept less than the full amount you owe.
Why would a creditor do this? They may realize it's in their best interest if you have little money and other creditors are also trying to get money from you. It helps if you can show a good reason you became unable to pay your bills.
You could attempt this type of debt negotiation on your own or hire a professional debt settlement company like Freedom Debt Relief. Using a professional will cost you a fee, but Freedom Debt Relief won't charge you upfront fees. You’ll only pay a fee after a debt is successfully negotiated and at least one payment has been made toward it.
The main benefit of hiring a professional is that they've done this kind of negotiation successfully many times. They know how to approach creditors and the kind of offer a creditor is likely to accept.
Debt settlement will appear on your credit history, and any amounts forgiven may be treated as income for tax purposes. If the total value of your debt is greater than the total value of what you own at the time you settle your debts, you won’t have to pay income taxes on the forgiven amounts.
Debt settlement could significantly reduce what you owe and give you a financial reset.
Bankruptcy
Bankruptcy is a legal process for dealing with debt. In bankruptcy, you demonstrate to a court that you can’t pay all your debts. The court then decides how to divide your assets among your creditors. Depending on the type of bankruptcy you file, you might propose a repayment plan that the judge approves.
This puts your finances in the hands of a bankruptcy judge. Once the process is complete, you should be protected from any further collection attempts for the debts included in your bankruptcy. A bankruptcy will stay on your credit record for seven to 10 years. Bankruptcy might be the best way to get on a better financial track if there's no other way of paying your debts.
Debt Relief Guide for Veterans
Veteran debt relief grants and other assistance are available from a variety of sources. Here’s a summary of those sources and the types of debt relief available.
| Source of relief | Types of debt relief |
|---|---|
| Government | VA pensions and loans, disability benefits, housing assistance, grants for adaptive homes and vehicles, state and local programs |
| Nonprofit providers | Grants for food and housing, employment advice and training, healthcare, grants for adaptive housing, debt management plans |
| Private providers | Negotiated debt settlement, bankruptcy advice, debt consolidation loans |
What documentation do you need to apply for veteran debt relief grants and other assistance?
Different organizations have varying requirements. If the program is designed for veterans, you'll likely need a copy of your form DD214, showing the nature of your discharge. You may need other records from your military service, along with your medical records.
Success Stories and Case Studies
America's veterans have a proud history of achievement. That includes overcoming financial obstacles as they transition to civilian life. Here are some examples that have been documented in national news stories:
One veteran amassed $110,000 in debt after leaving the military in 2010. A debt relief program helped her pay off $70,000 of that debt. She could then pay down the remaining $40,000 on her own.
Another veteran paid off $37,000 in debt with the help of a debt relief program. Getting rid of that debt enabled her to get a VA loan to buy a home.
Using more than one debt relief tool can help get the job done. One veteran used military disability compensation to get started repaying $25,000 in credit card debt. After that, the vet used a debt consolidation loan to reduce the cost of that debt.
Now it's time to write your own success story. You don't have to be defeated by debt. With the right help, you can be victorious.
Decide what source of help would best meet your needs. It might be the government, a nonprofit organization, or a professional debt relief company like Freedom Debt Relief.
Talk with a representative, and work with them to come up with a plan. If necessary, try more than one form of debt relief. In any case, take your plan through to the end to regain control of your finances.
Debt relief by the numbers
We looked at a sample of data from Freedom Debt Relief of people seeking credit card debt relief during July 2025. This data reveals the diversity of individuals seeking help and provides insights into some of their key characteristics.
Credit utilization and debt relief
How are people using their credit before seeking help? Credit utilization measures how much of a credit line is being used. For example, if you have a credit line of $10,000 and your balance is $3,000, that is a credit utilization of 30%. High credit utilization often signals financial stress. We have looked at people who are seeking debt relief and their credit utilization. (Low credit utilization is 30% or less, medium is between 31% and 50%, high is between 51% and 75%, very high is between 76% to 100%, and over-utilized over 100%). In July 2025, people seeking debt relief had an average of 75% credit utilization.
Here are some interesting numbers:
| Credit utilization bucket | Percent of debt relief seekers |
|---|---|
| Over utilized | 30% |
| Very high | 32% |
| High | 19% |
| Medium | 10% |
| Low | 9% |
The statistics refer to people who had a credit card balance greater than $0.
You don't have to have high credit utilization to look for a debt relief solution. There are a number of solutions for people, whether they have maxed out their credit cards or still have a significant part available.
Personal loan balances – average debt by selected states
Personal loans are one type of installment loans. Generally you borrow at a fixed rate with a fixed monthly payment.
In July 2025, 44% of the debt relief seekers had a personal loan. The average personal loan was $10,718, and the average monthly payment was $362.
Here's a quick look at the top five states by average personal loan balance.
| State | % with personal loan | Avg personal loan balance | Average personal loan original amount | Avg personal loan monthly payment |
|---|---|---|---|---|
| Massachusetts | 42% | $14,653 | $21,431 | $474 |
| Connecticut | 44% | $13,546 | $21,163 | $475 |
| New York | 37% | $13,499 | $20,464 | $447 |
| New Hampshire | 49% | $13,206 | $18,625 | $410 |
| Minnesota | 44% | $12,944 | $18,836 | $470 |
Personal loans are an important financial tool. You can use them for debt consolidation. You can also use them to make large purchases, do home improvements, or for other purposes.
Tackle Financial Challenges
Don’t let debt overwhelm you. Learn more about debt relief options. They can help you tackle your financial challenges. This is true whether you have high credit card balances or many tradelines. Start your path to recovery with the first step.
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Author Information
Written by
Erik J. Martin
Erik J. Martin is a Chicago area-based freelance writer whose articles have been published by AARP The Magazine, The Motley Fool, The Costco Connection, USAA, US Chamber of Commerce, Bankrate, The Chicago Tribune, and other publications. He often writes on topics related to real estate, personal finance, business, technology, health care, and entertainment. Erik also hosts the Cineversary podcast and publishes several blogs, including martinspiration.com and cineversegroup.com.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
Am I eligible for veteran debt relief if I didn't serve in combat?
Yes. Some disability benefits are for people who were harmed in connection with their military service. Many veterans’ benefits are available to veterans even if they didn't serve in a designated hazardous zone.
Can disabled veterans get their credit card debt forgiven?
Often, yes. Having a valid reason for not being able to repay your debt is key to convincing a credit card company to forgive part of your debt. Being disabled as a result of your military service is a solid reason.
Are there debt relief options specifically for families of veterans?
Yes, some VA benefits are specific to families of veterans, including pensions, housing assistance, and disability benefits. All may help with your debt. Also, certain nonprofits have programs geared toward families of veterans.
Will applying for veteran debt relief programs impact my credit score?
No. If the form of debt relief involves a loan, applying for credit could impact your credit score. However, many forms of veterans support don't involve loans and won’t impact your credit score. In the long run, paying down debt is likely to be good for your credit score.
Can I apply for multiple veteran debt relief programs simultaneously?
Yes, as long as the rules of the program don't rule it out. It might be better to apply to several programs, because multiple forms of debt relief could help solve the problem. Just be sure to disclose any support you're already receiving if you’re asked about financial resources when you apply.
How do veteran debt relief grants differ from loans?
A grant is a sum of money based on need or merit that doesn't have to be paid back. A loan is money that has to be paid back with interest within a specified period.
