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How to Use Government Debt Relief Programs

A lot of people aren’t aware of them, but the federal government does offer programs to help with debt. Admittedly, most such efforts are designed for very specific situations and scenarios, but there may be something available that can benefit you. Here’s how to use government debt relief programs.

Internal Revenue Service Initiative

If debilitating tax debt is your issue, you might want to check into the IRS’ Fresh Start program – rule modifications that remove the difficulty of repaying government debt. Part of that program renders it easier to utilize the Installment Agreement, a government debt consolidation program that enables you to repay several years of back taxes. Another portion of Fresh Start helps you use Offer in Compromise, the fed’s tax debt settlement program.

(Photo by Joe Raedle/Getty Images)

Student Loan Disability Discharge

The government has a vested interest in a lower student loan debt burden. After all, if you’re mired in such debt, you can’t make big purchases like a house, an inability that can hurt the economy.

Now, if you have a long-term disability, that could qualify you for what’s called a Total and Permanent Disability Discharge. If you are eligible, you could potentially get your whole student loan balance discharged. Wouldn’t that be super?

Income-Driven Student Loan Repayment

There are several federal programs that could drive down your monthly student loan payment, depending on your monthly take-home pay and family size. The goal is to render your student loan payments more manageable by making sure they encompass only a small portion of your income.

Public Service Loan Forgiveness

Among the best government debt relief programs are those that offer public service loan forgiveness. First responders and firefighters, or EMTs and nurses who are employed by a public hospital, may qualify for such forgiveness. You must be able to hang in for 10 years’ worth of steps, however. If you can, your student loan balance could very well be forgiven.

Federal Assistance with Credit Cards

This is where you will find hurdles, as there’s no federal relief help for plastic, per se. The government cannot forgive or help you pay off those pesky credit card obligations. If you have crushing debt, you can, however, file bankruptcy, which would be an act of last resort since you may have to relinquish some property. A better idea may be debt settlement, which is not connected to the federal government, but which could help you avoid bankruptcy, which stays on your credit for up to 10 years. A credible, established company like Freedom Debt Relief.

However, if you are in the military, the Service Members Civil Relief Act helps active-duty military members with financial woes including protection from eviction. With this Act, you may be eligible for a lower interest rate on mortgages and credit card balances.

Government Tips for Debt Relief Before You Get in Trouble

The government offers suggestions to help you avoid or manage debt, including making and keeping a budget, balancing your budget, and choosing your debt wisely. With the latter, if you don’t have enough income to cover your expenses, then a loan may be what you need to help you over the hump.

You should also establish an emergency fund so that you don’t have to whip out plastic every time there’s an unexpected expense such as a car repair or emergency travel.

Now that you know how to use government debt relief programs, you very well may be able to get some help, depending on your situation. Delve into these efforts to see what can be done for you.



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