Filing for federal debt relief can help you get back on your feet financially. This government program negotiates with your creditors and can help you eliminate debt. More than a million people file for bankruptcy every year in the U.S., which makes it the most popular method for debt relief. In addition to filing for bankruptcy, please keep reading below to determine potential Federal debt relief options for your individual situation.
Federal Debt Relief Programs
Federal debt relief programs are designed for people with low income and bad credit because it is challenging to pay off significant debt without help from the government. These programs are national in scope, unlike state-run programs. Using a federal debt relief program makes sense if you face a lot of debt due to credit card loans, public service, or school teachers. There are many benefits to pursuing federal debt relief, and there are several ways to do so.
Besides bankruptcy, financial institutions are helping consumers during the COVID-19 crisis. Many have announced new options for consumers, including lower monthly payments, relief from late fees, and a temporary reduction in interest rates. To learn more about COVID-19 relief options, visit the CARES Act website.
Under this federal debt relief program, teachers in specific fields are eligible for debt relief. Teachers who teach math, science, foreign language, bilingual education, and special education can qualify. Eligibility is based on the shortage of qualified teachers in the state. To find out if you qualify, contact your state’s education agency.
Students who attended a closed college may be released from their federal debt obligations. This applies if the school closed four months before graduation or if the student could not transfer to another school within three years. Second, the federal government offers students several forms of federal debt relief. These may include reduced, canceled, or modified debts. Some student borrowers are even challenged with tax liabilities and service terms. They can also request a discharge of their federal debts.
During the Obama administration, the Department of Education made strides to reduce the backlog of debt forgiveness claims. It has also improved efforts to reach borrowers who qualify for federal debt relief because of a disability. This has freed up millions of dollars for former students. In addition, the Biden administration has increased the amount of money that can be forgiven by former students.
Another option is to hire a debt settlement company to help you negotiate your debt. Freedom Debt Relief charges a percentage of the debt settled. This fee can range from fifteen to twenty-five percent, depending on the size of the settlement or your state. Knowing how much a debt settlement firm will charge is essential, as the fees vary between companies. You may qualify for a free consultation with a relief company, depending on your financial situation. During this time, you will get a good idea of the amount of savings you could expect and what time period it will take.
Federal Debt Relief Options Recap
Fortunately, there are options available to help people with overwhelming debt. Debt settlement can help people eliminate their debt by paying less than they owe. It can also be faster than bankruptcy or other debt relief options. Legitimate debt settlement programs pay off a person’s debt within two to four years. By contrast, other methods, such as debt consolidation, bankruptcy, or credit counseling repayment programs, can take much longer. Also, check out your financial institution’s website to find out if they are providing assistance. The page is updated frequently, so please check back often.