Low Income Financial Assistance Programs for Debt Relief

Financial Help for
Low Income Americans

Federal, state and local governments offer hundreds of program to help low-income families learn how to manage their money and make ends meet.

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About Financial Help for Families

About Financial Help for Families

Debt can be challenging for anyone, but it’s especially daunting for low-income families.

People in low-income households must worry daily about how the bills are going to get paid this month or even this week. It’s a paycheck-to-paycheck existence with little planning for retirement, college funds for the children, how much to put in the savings account … basically, no thoughts about getting ahead.

Mostly, it’s about survival and avoiding the plunge deeper into debt, especially credit card debt, the ultimate temptation for all consumers.

What Is Considered Low Income?

So, what is a low-income household? Is it the same as poverty-level household?

The answer is NO!

A “low-income household” is one whose taxable income for the preceding year did not exceed 150% of the poverty level amount.

A “poverty level household” is the minimum amount of income that a family needs for food, clothing, transportation, shelter and other necessities. It is also known as the federal poverty guideline.

So, the standards for low-income household are 50% higher than those of a poverty-level household. For example, in 2020 a one-person, low-income household would have income of $19,140, while a one-person, poverty-level household would have income of only $12,760.

At the far end of the scale, an eight-person, low-income household would have income of $66,180, while an eight-person, poverty-level household would have just $44,120.

The Department of Health and Human Services (HHS) puts out charts every year that define both low-income and poverty-level limits based on income and the number of people in a household. The charts below show what those numbers are for 2020 in the 48 contiguous states with separate charts for Alaska and Hawaii that reflect the cost of living in those two states.

48 contiguous states and the District of Columbia, as follows:

Household Size Low-Income Level Poverty Level
1 person

$19,140

$12,760

2 person

$25,860

$17,240
3 person

$32,580

$21,720
4 person

$39,300

$26,200
5 person

$46,020

$30,680
6 person

$52,740

$35,160
7 person

$59,860

$44,120
8 person

$66,180

$44,120
*Households with nine or more, add $6,720 for low-income and $4,480 for poverty level each person more than eight.

If you are a resident of Alaska or Hawaii, click below to find charts specific to your state.

Do I Qualify for Low-Income Government Assistance?

The federal government uses the income levels in the charts above to determine qualifications for low-income government programs such as the Affordable Care Act, Supplemental Nutrition Assistance Program, Public Health Service Act, Medicaid, Children’s Health Insurance Program, Title X Family Planning, Head Start and many others.

Qualifications – i.e. income levels – vary for each program so you would have to identify a program and know your income bracket to determine whether you qualify.

For example, being designated as a low-income family could mean qualification for taking part in the U.S. Department of Housing and Urban Development’s public-housing program. You can qualify for low-income housing if you earn no more than 80% of the median income level for your county or city. By earning 50% of that median income level, you would meet HUD’s lowest low-income limit.

The income figures in the charts are based on poverty levels determined each year by the Census Bureau. The 2020 poverty guidelines were calculated by taking the 2018 Census Bureau’s poverty thresholds and using the Consumer Price Index to adjust for price changes between 2018 and 2019.

The Census Bureau said the number of people living below the poverty line declined for four straight years, reaching 38.1 million people in 2018.

How to Pay off Debt with Low Income

At the low-income level, there’s obviously not a lot of wiggle room for disposable income. But with some resourcefulness, hard work and imagination, families can maximize their money by setting and tracking financial goals.

Here’s the money quote that should motivate you.

Paying off debt is rarely about how much money you make. It’s about managing the money you have.

Got that?

There are actually many high-income earners who live paycheck-to-paycheck because they’re frivolous with their money. The most financially successful families learn how to manage the money they have and budget accordingly.

For low-income families, here are some tips that will start you on your way to managing the money you have. The first step is to make a plan. What goal are you trying to achieve? What resources can you tap to make it happen? What percentage of your budget you allot for housing? For food? Utilities? Transportation?

If you don’t feel experienced enough to create an affordable budget, get a free consultation with a nonprofit credit counseling agency like InCharge Debt Solutions. The counselors are professionals who offer assistance to low-income families trying to escape from debt.

Here are other suggestions that should be considered resources for low-income families to regain control of their finances:

  • Get the Right Mindset — Staying positive, even if your budget strays off course now and then, is a big factor in success. You will probably need to scrutinize where every dollar goes. You might need to take some part-time work to open a few new revenue streams. Many people have done this and many were in worse shape when they started. If you can stay positive and diligent, good things will happen.
  • List All Your Debts — Simple stuff. Get out the legal pad. Figure out how much you owe. Hide nothing. This is a simple accounting of where you are starting.
  • Keep Track of Your Money — Even when people can barely rub two nickels together, they often have no clue where their money is going. You must chart your spending for 30 days, whether you use a note-taking app on your phone or a little notebook that you carry around. Either way, you must record every single purchase — no excuses. This will give you a picture — maybe for the first time — of where your money flows each month.
  • Make A Detailed Budget — This will help you to identify how much you have remaining each month to pay off your debts. Take your total debt and divide by the amount you have remaining each month. Now you roughly know how many months are needed to pay off your debt. Example: If you have $12,000 in credit-card debt and you can afford $400 each month toward paying it down, you will need roughly 2.5 years ($12,000 ÷ 400 per month = 30 months) to pay off that deb. This assumes you don’t keep spending on that credit card — an advisable strategy, by the way.
  • Accelerate the Payoff — OK, we already know your first concern. What if I don’t have much (or any) money at the end of the month to apply to my debt? Then you must get creative and probably make a few sacrifices. Here are some ways:
  • Sell Some Stuff — Neighborhood garage sale, eBay, Craigslist, Facebook Marketplace … you name it. Get some cash for the stuff you aren’t using and really don’t need. We all can do this.
  • Earn Extra Income — Bringing in an extra $50 or $100 a week will help you pay down the debt much faster. With the Internet, you can run a business from home. Become an Uber driver or Amazon flex delivery person. Work one night in a bar, restaurant or retail store. Check out the best side hustles and find one that works for you.
  • Cut Your Expenses — Cut the cable. Get rid of the home phone. Say bye-bye to Starbucks (at least a few days a week). No more eating out. When examining where your money is spent, you will inevitably discover places for cutbacks.
  • Become A Great Employee — You could work yourself into position for a raise or promotion. But you must become more valuable to your employer. Maybe you could get more certifications or training. Always volunteer for the jobs no one else wants and your reputation as a “go-to person’’ will be enhanced. Work on your skills and embrace all technology.
  • Create an Emergency Fund — This might be an after-the-fact suggestion, but putting away even $10-$25 a week for rainy-day purposes is a great way to avoid future financial emergencies. You know they’re coming. Start your emergency fund now and be ready for them.
  • Think about Refinancing — Paying high interest on your debts can be a backbreaker in the battle to get ahead. Check with lenders, especially credit unions, about refinancing. See if you can reduce interest rates and lower monthly payments, a combination that will make paying off all debt faster and easier.
  • Other Payoff Possibilities — There are debt-relief programs such as debt management, debt consolidation loans and debt settlement that can help you solve the problem. Make a call to a nonprofit credit counseling agency and let them walk you through the process to see if this is a faster, cheaper way to get out of debt.

Establishing and Maintaining Credit

Two of the many challenges for low-income families are establishing a solid credit history and maintaining good credit when you do.

Equifax, one of the three major credit bureaus in the U.S., estimated in 2020 that there were 25 million consumers who were “credit invisible.” That means they have not used a credit card or taken out any loans that would tell lenders how good they were at paying things off. Equifax judged another seven million people to be “credit unscorable” meaning they had used so little credit that there wasn’t enough information to given them a credit score.

Lacking a credit history, low-income consumers either won’t get approved for a loan or if they do, they face much higher costs to use credit to purchase a home, a car or any big-ticket item.

Higher-income consumers obviously possess more money, better lifestyles and more luxury items, but they also have more ways to get and keep good credit.

The Consumer Financial Protection Bureau said low-income consumers are 240% more likely to start their credit history with negative records, such as a debt collection. Higher-income consumers start with positive records, such as opening a credit card or getting a co-signer who has good credit.

Experian, another of the Big Three credit agencies, said consumers often begin their credit history with student loans. The amount owed usually peaks at age 34, according to Experian. Unfortunately, student loans usually have a far higher balance owed – average debt was$35,359 in 2020 – making it difficult to pay them off quickly. However, interest rate were so low in 2020, that borrowers could often refinance to lower interest rates and that helped pay down the debt faster.

Resources for Low Income Families

Whether you are retired, underemployed or having a bad run of luck, day-to-day living can be challenging with a low income. But there are scores of resources that can be helpful in all areas of life.

Financial Aid for Education

Federal Student Aid — The site details the types of grants and scholarships available.

QuestBridge — It has information on resources for high-achieving, low-income students, plus resources for educators.

The Education Trust — It advocates for students with high academic achievement, especially those in low-income situations, and offers a number of tools, including one to help in choosing a college based on performance.

Bloomberg Philanthropies — It helps high-achieving students who are low- and moderate-income.

FinAid — It provides information on educational loans, scholarships and military aid, as well as several dozen financial calculators, plus tips on choosing a college, options for online degrees, jobs and internships and more.

JKCF — The Jack Kent Cooke Foundation site has scholarship, grant and other info intended for “exceptionally promising” students from low-income families.

First Generation Student — This site caters to low-income students, offering tips and information about finding and paying for degrees at reduced cost.

GoCollege — The linked page has info on grants for low-income students, while the overall site has info on financial aid in general, college admission, a college survival guide and more.

Food, Housing and Health Resources

HealthCare.gov Subsidy Info — This page on the HealthCare.gov site provides an income range table for determining if a household is eligible for lowered health insurance rates.

AARP Healthcare — The American Association for Retired Persons Healthcare site provides info for low-income healthcare resources such as SHIP (State Health Insurance Program), ECA (Eye Care America), HRSA (Health Resources and Services Administration) and offers a Community Health Center Locator service.

U.S. FNS — The Food and Nutrition Services (FNS) branch of the USDA has a number of food assistance programs including WIC (Women, Infants and Children) and SNAP (Supplemental Nutrition Assistance Plan).

Medicaid — Medicaid.gov provides all the information you could need regarding Medicaid, CHIP (Children’s Health Insurance Plan) and other health-related programs.

Food Research and Action Center — FRAC (Food Research and Action Center) publishes information about initiatives, federal food/ nutrition programs, state initiatives and data and publications relating to hunger and poverty.

NLIHC – Resource Library — The National Low-Income Housing Coalition Resource Library offers publications, tools, research and reports related to advocacy work on housing programs for low-income families.

HUD.gov — This page of the U.S. Housing and Urban Development site covers rental assistance and has links to information on rights and responsibilities for tenants, while other pages have information on affordable housing.

U.S. OCC LIHTC — This page of the U.S Department of the Treasury’s Office of the Comptroller of the Currency site has information on low-income housing tax credit program plus links to various housing organizations.

U.S. OCS LIHEAP — This page of the U.S. Office of Community Services provides information about LIHEAP (Low Income Home Energy Assistance Program), while the overall site covers others state and community programs to assist low-income families. Also see http://liheap.org/ to learn about the fight to keep LIHEAP funding from declining.

ShelterListings.org — It has information by state for finding low-income, low-cost and supportive housing; homeless and day shelters and halfway housing.

Energy.gov WIPO — It has information about assistance for weatherization and energy bills for low-income families.

LowIncomeHousing.us — It offers a map-based interface to search for affordable housing options across the United States for low-income individuals and families.

Community Power Network — This page from Community Power Network has information about solar power for low-income communities, the politics surrounding the situation, and the benefits.

StartSleeping.org – This resource provides listings for shelters, based on your location, helping those who are homeless find a warm, safe place to sleep.

Financial Help for Women and Families

Single Mother Guide — It lists many resources for single mothers as well as statistics on single parenting.

Single Mother Help — It has a variety of information on tax, grants, assistance, education and job programs and initiatives for single mothers.

NWLC — The National Women’s Law Center monitors laws and policies favoring women and families, and has a Poverty and Income Support section that contains articles and reports about available family support programs, family tax credits and more.

Single Mommie — It lists a variety of resources for single mothers, including grants, scholarships, information on financial help, housing, government programs and more.

General Financial Assistance

Need Help Paying Bills — It provides a wide range of links to state and local assistance programs, debt counseling, charity assistance, health care and more.

Disability.gov – Financial Help — This is Disability.gov’s Guide to Financial Help for Low-Income Individuals and Families.

InterConnection – Low Income Online Store — This page on the InterConnection site (a nonprofit) offers discounted computer equipment for sale for qualified low-income shoppers.

Benefits.gov — This page of the Benefits.gov site has by-state links to information about various types of federal benefits, with additional options to search by category or agency.

USA.gov — The U.S. government provides a long list of assistance programs on this Benefits page, with categories including health and nutrition (SNAP, medicaid, medicare), job and unemployment (EITC, SS, UI, Training), education (loans, school meals) and more.

Seniors Resource Guide — This page of the Seniors Resource Guide lists federal, state and local options for low- to moderate-income seniors.

CAEL — This page of the CAEL (Council for Adult and Experiential Learning) site outlines initiatives for providing people of low-income or who are unemployed with job training and education.

DMV.org – Low-Income Car Insurance — This page of the DMV.org site (not associated with the U.S. Department of Motor Vehicles) provides information about states that have government-sponsored car insurance for low-income families.

Frugaling.org – My Low-Income Lifestyle — This article on the frugal living blog Frugaling.org offers a detailed account of how one person copes with living on a low income.

WiseBread – Top 100 Frugality Blogs — WiseBread, a top personal finance and frugal living blog, offers a useful list of the top 100 frugality blogs and sites based on multiple calculated factors — all of which offer valuable tips on stretching the dollar, saving money and building wealth.

Welcome to USA — This page of the Welcome to USA site has information and links to to multiple government benefits, including medicare, medicaid, CHIP, SSA, SSI, SNAP, WIC, TANF and more.

Suntopia — It has large database (more than 21,000 programs, nearly 26,000 cities) of social service programs in all 50 states for individuals and families.

WPFP — The Working Poor Families Project (WPFP) publishes reports and articles about the increasing economic divide in the United States, as well as links to relevant organizations and resources.

Ascend — Ascend at The Aspen Institute works towards helping parents and children “educational success and economic security” by highlight ideas and collaborations in that vein.

Aidpage — It’s a support network where people can anonymously share tips and advice to help each other through difficult times.

IRS.gov Taxpayer Advocate — This page of the Taxpayer Advocate Service site (of the IRS) offers LITC (Low Income Taxpayer Clinic) and eligibility information for low-income taxpayers seeking assistance in resolving a tax dispute with the IRS. It has a state map interface for easier search.

FCC.gov Lifeline — The linked page on the FCC.gov site has info for affordable telephone service options for low-income subscribers under the Lifeline program.

AARP — The American Association of Retired Persons) Low-Income Assistance page has links to articles on the site about tax help, income assistance and other ways to expenses.

Long-Term Debt Relief Solutions

If your debt load is too high for you to see a way out of it, the best advice is FREE! Call a nonprofit credit counseling agency like InCharge Debt Solutions and let one of their certified credit counselors take you through the long-term solutions available.

The goal for each counselor is to help you learn how to manage your money and regain control of your finances. They will take a look at your income and expenses, then match you to one of the programs that offers the best solution for your problem.

Your choices for long-term debt relief include:

  • Debt management — This program reduces the interest rate and monthly payment on credit card debt to an affordable level. Consumers make one monthly payment to the nonprofit credit counseling agency, which then distributes it to the card companies in agreed upon amounts.
  • Debt consolidation loan — Consumers take out one large loan and use it to pay off all their creditors. The loan should come with a lower interest rate than what you pay on credit cards, but you’ll need a good credit score to qualify.
  • Debt settlement — In this program, consumers try to settle the debt by paying less than what is owed. The consumer makes monthly payments to an escrow account and when there is enough money in the account, make a lump-sum offer to the credit card company. The card companies do not have to accept the offers. This involves a lot of negotiations and may end up costing more than what you owe.
  • Bankruptcy — This is “nuclear” program when you are so hopelessly behind there is no chance you will pay your bills. The good news is that a successful bankruptcy filing gives you a chance to start all over with a clean slate.

ALASKA

Household Size Low-Income Level Poverty Level
1 person

$23,925

$15,950

2 person

$32,325

$21,550
3 person

$40,725

$27,150
4 person

$49,125

$32,750
5 person

$57,525

$38,350
6 person

$65,925

$43,950
7 person

$74,325

$49,550
8 person

$82,725

$55,150

HAWAII

Household Size Low-Income Level Poverty Level
1 person

$22,020

$14,680

2 person

$29,745

$19,830
3 person

$37,470

$24,980
4 person

$45,195

$30,130
5 person

$52,920

$35,280
6 person

$60,645

$40,430
7 person

$68,370

$45,580
8 person

$76,095

$50,730

Sources