As of April 2011, there are no state or federal government grants available for consumers who wish to consolidate or eliminate their personal loans, such as credit cards. While it's true that local, state, and federal governments often award considerable sums to organizations and individuals -- often, money that doesn't have to be repaid -- the money must be used for a specific purpose, and applicants must meet certain criteria.
The Purpose of Government Grants
Government grants exist for a variety of purposes, each specific to its own grant. The website Grants.gov was developed to streamline the grants approval process, and individuals and groups may apply to receive any grant for which they believe themselves eligible. For example, if you are anxious to conduct medical or environmental research, there may be a grant for you.
Competition to receive a grant -- money that doesn't have to be repaid -- is stiff. Applying is always free -- one way to know if the grants application you're using is legitimate. You should never need to provide your bank account or credit card information, and if you're paying for "government grant assistance," know that you can research grants by yourself for free, quite easily, at Grants.gov.
Government Help for Consumers
If you're a homeowner, the government provides help through the Making Home Affordable program. You may qualify for a "streamline refinance" or a mortgage modification, but you must apply through your lender. If you're looking to buy a home, you may qualify for an FHA program that permits small down payments and has easier qualification rules.
Remember that the government won't reach out to you and offer to solve your debt problem; if you are contacted, report the incident to your state attorney general's office and the Better Business Bureau. Fake grants agencies are semi-legitimate scams at best, and felons at worst.
Your Biggest Risk
When you provide personal information to a company that claims to assist, provide or administer government grants, you are opening yourself up to the chance that your identity will be stolen. An identity thief may use your address, bank account, credit card or social security number to establish false accounts in your name and then accumulate thousands of dollars in debts. The debts won't be repaid, and your credit history and score will suffer tremendously.
Review your free credit reports at AnnualCreditReport.com and report suspicious activity immediately. Make sure to indicate that you suspect you've been the victim of identity theft.
Debt Consolidation Options
If you need to consolidate your debts but aren't sure what to do, you have options; if you have home equity, one popular way is to take out a home equity loan. Your debts will be consolidated, most likely at a very low interest rate; however, you have secured loans with your home. If you default, you could lose your residence.
You can also try the "debt avalanche," where you concentrate on paying one high-interest loan first while paying the minimums on the others. When it's paid, apply the payment to another high-interest loan. Because you're consistently increasing your payments on your debts, the loans are repaid more quickly.
Finally, consider calling the National Foundation for Credit Counseling. After a free consultation, you may be eligible to enroll in a debt management program.
There aren't any easy answers for a consumer with a debt problem, but there are solutions. Don't give up.
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