What Are Veteran Debt Relief Grants?

Financial problems can happen to anybody, but veterans face some special money challenges.

These challenges can make it harder to handle routine financial tasks, like paying debts and making ends meet. Fortunately, there are several forms of help available to meet these challenges.  

As a veteran, you’re entitled to the financial assistance, information, and legal advice necessary to make a successful transition into civilian life.

Common Financial Challenges for Veterans

Many people struggle to make ends meet. On top of routine bills, millions are struggling with a record amount of debt and high interest rates. 

On top of the challenges faced by ordinary Americans, veterans can also face some particular financial trouble:

• Leaving the military means transitioning to a new career. That can mean going weeks or months without a steady paycheck while you search for a job. Then you may have to take a step down in pay in order to get started.

• To qualify for a new career, you may need fresh education or training. You may have to take on new debt to learn the right skills.

• Many veterans come home with health challenges resulting from their service. These may limit your ability to work, or to deal with the stress of meeting financial responsibilities. 

• Gaining access to the benefits you’ve earned can be confusing. It’s likely to involve learning about a new set of rules and procedures. There also may be delays in processing your claims.

A survey by the Pew Research Center found that more than 1 in 3 veterans (35%) experienced trouble paying bills. More than 1 in 4 had collected unemployment. While 91% felt the military trained them well for their service, only 52% said the military prepared them well for the transition to civilian life.

Veterans are no strangers to handling difficult tasks, and fully capable of overcoming the financial challenges of civilian life. A good place to start is finding the right veteran debt assistance programs.

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Veteran Debt Relief Options

There are two major sources of veteran debt assistance—government programs and private ones. You don’t have to pick one source of help or the other. You may find that each type has something to offer. 

As is often the case with financial issues, there may be no single answer to your needs. Instead, you may find various programs that fill in a piece of the puzzle until it becomes easier to solve.

Government debt relief 

The government provides various forms of financial help and guidance for veterans:

Here are some places you can find this type of government assistance:

• The Veterans Administration (VA). The VA offers financial benefits that could help you meet your debt obligations. These include military pensions, disability compensation, and allowances for people who have trouble caring for themselves. In addition, the VA offers a variety of financial management tools and educational resources.   

• State and local programs. Your state or local government may offer additional financial programs that could help you with financial problems. These may include financial assistance, help with preparing benefits claims, or financial education resources. 

Debt relief types

Besides getting help from the government, you may also find private organizations offering debt relief for veterans.

Credit counselors

There are just over 1,500 nonprofit credit counselors registered with the National Foundation for Credit Counseling (NFCC). There’s a good chance you’ll find one in your area. In addition, the NFCC itself offers a variety of debt management resources, including some geared specifically to veterans. 

A credit counselor can explain options for managing debt. This process could be as simple as helping you organize your debts and budget for your payments. If you need more guidance, a credit counselor could help you explore options.

One option is a debt management plan. A debt management plan won’t reduce the amount you owe but gives you a structured plan for fully repaying your debts. In a debt management plan, the credit counselor organizes your debt payments and collects one monthly payment from you to cover those payments. The credit counselor then makes payments on your behalf to your individual creditors. The counseling company may take a fee for these services.

As part of this process, the credit counselor may negotiate new payment terms with your creditors, such as lower interest rates or fees. These steps could help you clear the debt.

Debt consolidation loan

Another option is debt consolidation. Debt consolidation involves refinancing your current debt with a new loan. This can reduce the number of payments you have to make each month. It can also make those payments more affordable. 

Debt settlement

If you can’t afford to fully repay your debts, you could seek guidance from a professional debt relief firm. The type of veteran debt assistance these companies provide is called debt settlement. That means negotiating with your creditors to accept less than the full amount you owe, but consider the debt cleared. Creditors might be willing to do this if they are convinced you're unable to pay the full amount.

Debt relief companies charge a fee for this service. Legally though, they can't charge you until they’ve settled a debt. If the settlement reduces the amount you'd otherwise owe, the fee may be well worth it. Having debt forgiven may hurt your credit score. In the long run, though, getting out from under the burden of overwhelming debt could help you regain financial stability. It’s easier to build and maintain a healthy credit profile once you’re on solid financial ground.

Financial Assistance for Veterans

Often the best way to make progress on paying down your debts is to get help with your day-to-day expenses. For this type of veteran debt assistance, consider programs such as:

• Veteran’s pension. Depending on the length and nature of your service, you may be eligible for a military pension. Inquire through the VA.

• Disability compensation. This is a tax-free monthly benefit paid to veterans with certain physical or mental conditions related to their service.

• Healthcare. You may be eligible for health insurance through the VA, as well as free coverage for service-related conditions. 

• Aid and attendance benefits. This is an additional monthly payment for housebound veterans in need of financial help. 

• VA loans. These government-backed loans make mortgages available to veterans at a reasonable cost. VA loans could help you buy a home or refinance an existing mortgage to make it more affordable.

• Assistance for homeless veterans. The VA provides free health care to eligible veterans who are homeless or at risk of becoming homeless. The VA can also connect you with local resources to provide further support.

• Help with food security. If you’re having trouble affording meals, the VA’s food security office can help you access the nutrition you need. 

The above types of financial assistance may not directly provide debt relief for veterans, but by taking care of other expenses, they may make it easier to keep up with your debt payments.

Grant programs

You may have heard about veteran debt relief grants from the government. Veteran grant programs generally don’t provide veteran debt assistance directly, but you may be able to benefit from them indirectly.

There are national, state, and local government grants earmarked for organizations that help veterans. Whether you qualify for help from any of these organizations depends on the details of your specific circumstances.

You can find out more about support organizations in your area through the VA, or at Grants.gov.

Nonprofit resources

Nonprofit organizations provide resources that could help veterans in need. For example, help for people experiencing homelessness, veterans’ debt assistance, mental health counseling, addiction resources, employment training, and job search help.

Nonprofit organizations are often community-based, so they vary. Your local VA should be able to identify organizations in your area. Another useful resource is the National Veterans Foundation (NVF). 

Legal Rights

A vital form of veteran debt assistance is legal protection against creditors.

Here are some key laws that can protect you:

The Military Lending Act

This law applies to personal credit you got during active military service. As long as you obtained the credit while on active duty, its protections continue after your service is over.  

The MLA covers several forms of credit, including payday loans, credit cards, student loans, and unsecured loans. The law caps interest at 36%, restricts access to your bank accounts, and prevents you from losing your legal rights even if you sign an agreement otherwise.  

The Fair Debt Collection Practices Act (FDCPA)

The FDCPA applies to all consumers, not just veterans. It limits the methods debt collectors can use to try to get payments from you.

Debt collectors can’t use abusive tactics such as contacting you at work when you ask them not to, publicizing your debt situation, or using deceptive or threatening language. 

The Fair Credit Reporting Act (FCRA)

The FCRA also applies to all consumers. It governs how debts and other financial matters can be reported on your credit record. It also covers your rights when disputing information on your credit report.

Those rights include access to all information about you that has been reported to a credit bureau. If you question an item on your credit report, that report must include a notation that the item is under dispute.

Next steps

If you are looking for veteran debt assistance, here are some steps you should consider:

1. Contact the VA to make sure you are getting all the financial benefits available to you.

2. Do an assessment of your debt situation. Figure out if it’s possible to meet your payments by yourself, or if you need outside help. 

3. Talk to a debt expert. Start by inquiring about free services to help you understand your options.

4. Consider working with a debt relief specialist. If your payments are unaffordable no matter what you do, a debt relief specialist can negotiate to try to reduce the amount you owe. 

Each step you take can put you closer to solving your debt problems.