Debt can affect your finances and ability to cover your basic expenses. If you’re in a bad debt situation, one of the options you can explore is debt relief. Debt relief is meant to either reduce the outstanding amount owed to creditors, lower debt interest rates, or reduce monthly payments towards the loan. In many cases, debt relief comes from private entities. However, there are government programs that you can benefit from.
So, what do government debt relief programs cover? Let’s explore these programs and how they can help you get out of debt. Note that government debt relief programs don’t cover credit card debt.
But here’s what they do cover.
Income-driven Student Loan Repayment
Student loan debts stand as part of the largest debt owed, standing at $1.4 trillion and larger than the national public credit card debt. Debt owed by young graduates is not good for the economy, as workers are paying more towards student debt compared to purchasing a house as part of their life-long and long-term investment strategy.
Due to this reason, the federal government provides debt relief programs that reduce the amount of money paid by former students towards student loans monthly. Now revised, the amount paid towards the student loan is based on a person’s income and the household size rather than the traditional fixed monthly payment based on the loan and interests accrued. The main objective of the revision is to make the student loan payment process more affordable and manageable by taking up a small percentage of a person’s income.
Income Tax Debts
Government debt relief programs have expert negotiators proficient in dealing with income tax debt. The IRS fresh start program is a government program that the IRS has set up for relieving persons who have fallen behind on income tax payments. The program was initiated by making a few distinct changes to tax laws. These changes have made it easier for people with large tax debts to pay the government:
- Payment plan agreements/installments allow you to pay the tax debt within a specified period
- Tax liens let the government repossess your valuables (personal possessions) as part of payment towards your tax debt
- Offers in compromise (OIC) reduces the amount of money you’re required to pay towards your debt settlement with the IRS
Public Service Loans
Public service loans also qualify for government debt relief. The coverage allows persons working in the public service space, such as emergency medical technicians, police officers, nurses, and firefighters, to “get forgiveness” for their student loans. The government could erase your entire student loan in full! For that to work, there’s a process that public service workers must follow for ten years, after which their student loan balance may be forgiven in full.
Student Loans for Persons with Disabilities
This government debt relief program is meant for those experiencing long-term or permanent disabilities. The Total and Permanent Disability (TPD) discharge lets disabled people have part of their entire student loan discharged. For you to qualify, there are numerous specific conditions to meet. As a disabled person, you must complete and submit a TPD discharge application and all other documentation that indicates you meet all the requirements needed to qualify as permanently disabled. You could present documents from a physician, the Department of Veteran Affairs, or the Social Security Administration to prove you’re disabled and qualify for student loan debt relief.
So there you have it. the federal government does provide debt relief programs, but only in cases in which you owe the government money. For consumer debt relief, you’ll need to turn to a company like Freedom Debt Relief, where you can learn more about dealing with debt in general. The government also offers advice about dealing with consumer debt, if not direct assistance.
Still though, if you’re in a hard financial situation following accrued federal loans, the above government debt relief programs can help you. They can enable you to manage your debt and make ends meet comfortably. You also have the opportunity of clearing any government debt you have at a lower cost and set yourself on the right path towards financial control and freedom. Now that you have the answer to “what can government debt relief programs cover,” you’re one step closer to securing your finances.
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