There are several options for military debt relief specifically planned for military families struggling to do their monthly bills. Debt consolidation options are available through credit counseling or a loan that pays off other types of debt, both of which generally create a lower interest rate, singular monthly payment. The service member Civil Relief Act exists to create interest rate restrictions and other actions against military families, typically with regard to mortgages. Another tangible option is student loan repayment programs available if registered during recruitment or reenlistment. Debt settlement is a last resort that can completely eliminate debt, but creates a negative impact on personal credit scores and potential problems with military growth.
Military debt consolidation through credit counseling is a form of military debt relief. This type is specifically aimed at families with multiple monthly debt payments for unsecured debt, such as credit cards. Advisors work with lenders for partial debt repayment via reduced interest rates or settlements on previous balances. Benefits include longer debt repayment, revised high interest rates, and a monthly payment, all of which generate lower payments overall than multiple single payments. A military member credit score can be assisted by such a program with regular payments, as long as deadlines are met.
Consolidation loans are another option for military debt relief. However, the individual should ensure that the interest rate can be compared to other available unsecured loans. Caution should be exercised, as sometimes lenders will especially use the word “military” in their title or when describing the loan when no such association exists. When valid, these loans should have an interest rate lower than those with high interest credit cards facilitated with such a plan, saving money in the long run.
The Civil Service Relief Act (SCRA) provides special protection for active duty military personnel or recently terminated active duty service, with their families. The primary goal of SCRA is to defer or suspend certain types of debt, including mortgages. Services include restrictions on maximum interest rates, eviction relief, or litigation in relation to a mortgage. Military members are advised to seek legal advice when using this benefit.
A student loan repayment program can assist with the payment of student loans if anyone is considering joining the military. The program must be known about in advance, as it has to be requested when enlisting or reenlisting. 15% of the balance of the loans is paid up to maximum limits, and each branch of the military has a different maximum. Some score minimum requirements are also a requirement for qualification tests to receive this type of military debt relief.
If more military debt relief than the previously mentioned types is desirable, then debt settlement can be considered. Quite simply, someone who signs up for debt settlement chooses to stop paying off debt. While this is considered complete debt elimination, this method harms the individual credit rating, and counseling should be sought in order for the individual to understand both the implications for future credit needs and his or her status with the military.
- The Servicemembers Civil Relief Act (SCRA) offers some level of debt protection for active members of the military.
- One form of military debt relief is military debt consolidation through credit counseling.