The federal government offers public debt relief and forgiveness to people struggling with payments on their loan obligations. Qualifying for these programs generally requires an assessment of need -- homeowners and other debtors who are capable of making their loan payments usually are not eligible for public help. Debt relief programs are available to both struggling homeowners and those with large student loan burdens. The government may be able to modify a home loan, refinance a home loan, consolidate student loans and forgive the loans of those who perform public service.
Home Affordable Modification Program
The Home Affordable Modification Program is a federal government initiative designed to help struggling homeowners with debt relief and debt forgiveness. The goal of this program is to design a solution to mortgage problems by working with both the lender and the borrower making it possible for borrowers to meet their monthly payments. Assistance from this program is only available to struggling households -- homeowners whose mortgage payments exceed 31 percent of their monthly income before taxes.
Home Affordable Refinance Program
The Home Affordable Refinance Program is similar to the Home Affordable Modification Program. Like HAMP, HARP is run by a joint partnership of the Department of the Treasury and the Department of Housing and Urban Development. The main difference between the two programs is that HARP provides assistance mainly by working with the lender to adjust the interest rates -- not principal or the term -- of a home mortgage. To qualify for this program, a homeowner must have a loan guaranteed by the Fannie Mac or Freddie Mac mortgage companies that is larger than the amount their home is actually worth.
Student Loan Consolidation and Repayment Plans
The government also provides public debt relief assistance for educational loans. This is especially important because many of these loans cannot be relieved by bankruptcy. One of the these options is the Department of Education's loan consolidation program. In this program, those struggling with student loans can roll together loans from multiple creditors and lower their monthly payments. This has the effect of reducing the number of loan bills they have to pay and reducing the amount they have to pay to student loan lenders.
Student Loan Forgiveness
Many former college students struggling with student loan repayments may also be able to get assistance through public debt forgiveness. In many cases, the federal government and other public agencies will pay off the remainder of a student's loans in exchange for public employment, volunteering or military service. Generally speaking, these programs benefit those with large student loan obligations and few financial resources with which to meet them. Those who benefit most from this federal loan forgiveness are people who work full time in public service.
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