InCharge Debt Solutions recognizes that service members from all branches of the US military face unique financial challenges related to frequent relocation, deployment, disability and PTSD. InCharge offers credit counseling 100% free of charge. We’re here to help.
Military and Veteran Debt Relief
Members of the military have plenty to worry about when they are serving our country and the last thing they need is a little voice inside their heads whispering: “Did you pay the mortgage and credit cards off this month?”
The good news is laws protect them from many civilian credit worries. The bad news is a lot of military personnel still suffer severe financial difficulties and have a hard time finding debt-relief options.
If you are an infantryman in Afghanistan or a civilian in Topeka, debt consolidation – whether it’s a personal loan, a debt management program or in the most severe instances, bankruptcy – can ease the strain. There is no financial strain quite like military financial strain, but there is help.
Service members are held to a higher standard. They can’t abuse alcohol, drugs or even credit. Article 134 of the Uniform Code of Military Justice spells it out – Service members who don’t pay their bills “bring discredit upon the armed forces.”
They can lose their security clearances, promotions and even face court martial if they fail to live up to their financial obligations. Despite such consequences, 36% of military service members have trouble paying monthly bills, according to a study by the Financial Industry Regulatory Authority (FINRA).
That’s why you see so many payday lender storefronts with flashing signs outside the gates of military bases. They won’t tell you that making only one monthly payment on a debt consolidation loan or personal loan with lower interest rates might be the best route to solvency.
It’s far more advisable than going into a strip-mall office and taking out a payday or auto-title loan where the average interest rate is 400% and could be as high as 1,000%. If you’re even slightly tempted by the flashing signs, please take a deep breath and start exploring other debt-relief options. The Service Members Civil Relief Act is your friend.
Military & Veteran Debt Consolidation Loan Options
If you are looking for a debt reduction plan, a good place to start would be examining the interest rates you pay on your current bills, especially credit card debt and compare those against the interest rate charges for a personal loan.
The personal loan is almost always going to have lower interest rates and thus, save you money right away, especially if you have collateral to back up the loan.
Banks, credit unions and online lending services are all in the business of making personal loans that allow you to consolidate several bills and pay them off, all at once. You’re left with one monthly payment that should be less than what you were paying for all the bills you consolidated. It certainly will produce less chaos in keeping up with just one payment a month.
The problem many veterans and active military members must overcome is the fear they won’t qualify for a personal loan because of a bad credit score. Not true!
Most banks and credit unions recognize the financial difficulties service members face and welcome them as customers. The rates advertised in early 2017 were as low at 5.99%, based on your credit score. The Military Lending Act of 2007 caps interest on personal loans at 36%.
Active or retired service members also could explore numerous personal loan options available online. Online lenders have become very aggressive in offering interest rates at reasonable prices to help them lure customers away from traditional lenders like banks and credit unions.
If you’re not happy with the interest rate offered or just don’t want to take out a personal loan, you could seek help from a nonprofit credit counseling agency. Counselors walk you through the steps of setting up a monthly budget and then recommend debt-relief options.
One of those is a debt management program, which is a good way to eliminate debt, increase your credit score and relieve stress from financial problems. Counselors work with lenders to reduce the interest rate you’re paying and the amount of your monthly payment so that all debt is eliminated in a 3-5 year time frame.
Military Debt Relief Programs and Services by InCharge Debt Solutions
From free budget and credit counseling to personal finance books and podcasts, InCharge Debt Solutions is dedicated to serving those who serve our country. Financial readiness keeps our troops and our nation strong.
Service Members Civil Relief Act
It’s been around since 1940 and was initially called the Soldiers’ and Sailors’ Civil Relief Act, though its origin dates back to the Civil War.
Congress passed legislation that gave relief to soldiers who could not pay their debts while at war. Union privates made all of $13 a month, which was actually $2 more than their Confederate counterparts.
That wasn’t a lot, but at least they didn’t have to deal with collection agencies threatening to ruin their credit score. The Service Members Civil Relief Act limits those hassles and provides other protections for active duty personnel.
The law bans creditors from proceeding with foreclosures, evictions, garnishments and repossessions and other actions until 60 days after a service member returns from active duty.
When service members are called to active duty, lenders are required to set a maximum interest rate no higher than 6%. Despite such protection, studies show that one in four military families carry $10,000 or more in credit card debt, and 10% of families owe $20,000 or more.
More than half of enlisted and junior non-commissioned officers reported they often make only minimum payments on their credit cards.
Veteran Debt Relief and Financial Stress
The consequences can be far worse than having your car repossessed. Veterans commit 22 percent of all suicides in America, yet they comprise less than 10% of the population.
The simple explanation is Post Traumatic Stress Syndrome, but only 13.5% of military personnel ever see combat. More than half are never deployed. They struggle with everyday problems like finances and don’t know what to do.
“In truth, suicide is often the desperate act of a soldier or veteran in a desperate situation. And one important component of that desperation is financial stress,” Rep. Rush Holt (D-N.J.) said in Congress. “We err if we think suicide is only a mental health problem.”
Holt authored a proposal to study the problem in 2012, and that led to the passing in 2015 of a military suicide prevention bill. Holt said he was disturbed by the fact the military employed only 314 full-time personal financial managers on military bases worldwide.
Even with help from volunteers, the Pentagon reported financial planners conducted 1.8 million financial meetings that lasted 15 minutes or fewer. That might help explain why 20% of military personnel have taken out payday and auto-title loans, which is three times the rate of civilians.
The quickie-loan industry targets military, knowing the pay is steady but relatively low. Military pay starts at $1,566.90 a month. Many service members are young and inexperienced when it comes to finances. They don’t read the fine print that would make a banker’s eyes pop out.
According to a ProPublica report, one Marine sergeant got a one-year, $1,600 loan by putting up his 1998 Ford SUV as collateral. When he fell behind on the loan, he realized he’s agreed to a 400% interest rate. That $1,600 loan had $17,228 in interest charges over two and a half years.
Disabled veterans face even great financial challenges. Learn about programs for disabled veterans from the Veterans Administration.
The Military Lending Act of 2006
The Military Lending Act in 2006 limits such predatory practices. More relief is offered through the Veterans Administration.
The VA home loan program usually looks at only the previous 12 months of credit history unless bankruptcies, tax liens or collections are involved. It also doesn’t require a down payment, and interest rates are typically lower than those offered with conventional loans.
Military service members can also get a loan by refinancing their house through the VA. It’s basically a consolidation loan, since you make one monthly payment to the credit counseling agency, which distributes the funds to lenders.
The danger is your house is collateral and can be foreclosed if you don’t make the payments. Such decisions require careful consideration, and the lack of such financial planning in the military helped lead to a suicide prevention bill.
Defending Your Home – eBook
Defending Your Home is designed for service members, veterans and their families to help with navigating the special housing challenges faced by those who serve. May this book help you establish and maintain your own personal and financial security through sustained homeownership.
Credit Counseling for the Military
InCharge Debt Solutions offers free credit counseling to the military and veterans. If you qualify, you may join a Debt Management Plan, which could help you pay off your debt over three to five years.
Instead of having an array of bills to keep track of, debt consolidation or a Debt Management Plan would mean writing one check per month. Whether that’s the answer or not, there are far better solutions than the quick fixes offered outside of military bases.
Military service personnel have enough to deal with just serving our country. The last thing they need is for bad credit to make them a discredit to the armed forces.
Military Debt Consolidation
If you are looking for a military debt consolidation program, InCharge’s debt management program may be a good fit for you. With this program, you can consolidate your debts without taking out a new loan. Our online credit counseling tool will help you determine if you qualify. If you do qualify, you will be able to see an estimate your monthly payment after your individual monthly payments are consolidated. We will also provide you with an estimate of how much you will save in interest and time on our program.
InCharge Debt Solutions Military Debt Relief Programs
As a way of honoring military service and showing appreciation for the sacrifice of military families, InCharge offers these tailored resources:
- Military Money: InCharge is proud to publish Military Money, a comprehensive personal finance website for servicemembers and their families. Find informative articles, videos and podcasts about the GI Bill, VA loans, Thrift Savings plans and much more.
- Free printed military guide books to military bases as well as motivational on-base workshops. Recent publications include Defending Your Home, a guide to military housing issues, and Transitions: Where Do I Go from Here? How to transition from military to civilian life.
- Free personal finance education which include articles, tools and resources are available through InCharge’s website, including the daily personal finance tips-oriented podcast Military Money Minute. The MilitaryMoney website earned Top Ten Status in Kiplinger’s “Personal Finance Guide for Military Families, 2009.”
Additional Online Resources for Military Families
Military OneSource: This service is provided by the Department of Defense at no cost to active, Guard and Reserve (regardless of activation status) and their families. The program provides Service Members with a connection to an NFCC Member Agency (InCharge Debt Solutions is a member) and provides funding for up to 12 counseling sessions per family.
Explore VA Health Care Benefits: Explore VA provides a fast way to learn about VA benefits, find out which ones you may be eligible for, share information with friends and family, and apply for benefits.
MilitaryINSTALLATIONS: This is the official DoD source for installation and state resources available to active duty, guard and reserve service and family members.
U.S. Military Personnel and Veterans page of USA.gov: Here, you’ll find resources and official information for active duty military personnel, including history, support for families, benefits, career assistance, education and much more.
Service Members HomePage, Consumer Financial Protection Bureau: This government website has sections on Planning Your Future and Protecting Your Finances and much more.
Veteran’s Affairs Website: The U.S. Department of Veterans Affairs provides detailed information on health care benefits, life insurance, pensions, home loans, survivor benefits, education and much more.
Military.com: This is a good resource, which explains in plain language the many benefits available to active duty personnel, reserves, National Guard, retirees, veterans and their families.
InCharge website provides military debt relief information, tips and tricks on home ownership, pay & benefits, military life, investment and retirement, taxes, debt help, banking and saving and auto loans and much more.
- (Kiel, P., Hartman, M) (2013, May 15). On Victory Drive, Soldiers Defeated by Debt. Retrieved from https://www.propublica.org/article/on-victory-drive-soldiers-defeated-by-debt
- (NA) (2010) Financial Capability in the United States, Military Survey – Executive Summary. Retrieved from http://www.finrafoundation.org/web/groups/foundation/@foundation/documents/foundation/p122257.pdf
- (Gallagher, B) (2014, July 18) Is Financial Stress Killing our Soldiers? Retrieved from http://www.huffingtonpost.com/bj-gallagher/is-financial-stress-killing-our-soldiers_b_5344083.html
- (NA) (ND) Understanding the Soldiers and Sailors Relief Act. Retrieved from http://www.militaryauthority.com/benefits/legal-issues/understanding-the-soldiers-and-sailors-civil-relief-act.html
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