Grants for Low-Income Families in Credit Card Debt

There is no simpler way to say it: there is no grant -- either private, government or corporate -- that helps a borrower pay off credit card debt, regardless of the individual's income. However, that doesn't mean there isn't help available. Low-income families have excellent opportunities for aid. Learning to recognize a scam when you see it and realizing that there's no easy way out of your financial situation are your first steps toward financial independence.

The Grant Scam

The federal government takes grant scams so seriously that it has issued numerous public alerts warning desperate borrowers about fraud. Warnings appear on both the Federal Trade Commission and Grants.gov websites. Grants are used to further the public good, and competition for this "free money" is fierce. Grantors don't feel that paying your credit card debt assists the general public in any way, but a grant scammer tells you otherwise. Scammers not only charge a fee for grant information -- this information is provided free by the federal government, by the way -- but they collect personal information and use it to steal your identity.

Legitimate Help

Your best move is to contact a credit counseling agency. The best have earned an "A+" rating by the Better Business Bureau. A credit counselor will give you a free, no-strings-attached one-hour budget consultation and determine your eligibility for enrollment in a debt-management plan. If you're eligible, the counselor will contact your creditors on your behalf to negotiate better terms. The accounts are then closed, and you begin an affordable repayment plan. Debts are paid in full, and the plan usually lasts for three to five years. Only unsecured debts, like credit cards, can be enrolled in a debt-management plan, but counselors often provide housing and bankruptcy advice, as well.

Settlement and Bankruptcy

If you are able, you may consider settling your debts. This only works if you're at least three months behind in payments, and you must be prepared to make a lump sum payment. However, if approved, you can pay your debts off for anywhere between 30 and 50 cents on the dollar. Be advised that this approach damages your credit severely; settlements and late payments last for seven years on your credit. The other approach -- even worse for your credit -- is bankruptcy. Credit card debt is usually eliminated entirely in bankruptcy, although the bankruptcy remains on your credit report for 10 years.

Additional Assistance

If you have a low income and are struggling to make ends meet, consider investigating local programs established to provide a helping hand. Each state and county offers food assistance, health insurance assistance and housing resources, and you may qualify for aid but not realize it. For example, there are several programs available to get nutritious food on your table, from farmers' market programs to the summer food program for kids to the Supplemental Nutrition Assistance Program, also called SNAP. Benefits are often paid via debit card for ease of use. In addition, states provide a variety of health insurance programs. Program eligibility requirements for each are available online, and through reputable private and government agencies.