Only a very limited number of government programs offer grants to help with debt. Programs available limit assistance to critical needs, such as housing and utilities, but do not help with other types of debt, such as credit card bills. However, certain government programs can provide loans to help you better manage certain types of debts, such as mortgages and student loans. The federal government funds the majority of programs, but a limited number of local governments offer emergency assistance.
Homeless Prevention and Rapid Re-housing Program
If you are behind on rent payments and face the threat of homelessness, you may qualify for the Homeless Prevention and Rapid Re-housing Program. Funded by the American Recovery and Reinvestment Act of 2009, the U.S. Department of Housing and Urban Development administers the HPRP. HUD grants funds to states, which administer HPRP benefits for their residents. For example, the State of North Carolina offers HPRP assistance through its Housing Finance Agency. The HFA offers financial assistance for qualified residents to help pay back rent, security deposits and moving expenses. You can only receive HPRP assistance for rental housing expenses, but the program does not provide help to prevent foreclosure.
LIHEAP
If you have received a disconnection notice due to unpaid utility bills, you may qualify for the Low Income Home Energy Assistance Program. The U.S. Department of Health and Human Services sponsors LIHEAP, and awards block grants to states, Indian tribes and United States territories. Grantees administer the program through local government and nonprofit agencies, which assist local residents by helping to pay their utility expenses. You must meet income limits to qualify for LIHEAP and award guidelines vary from location to location. Typically, LIHEAP will not pay funds directly to you, but rather make payments to your utility providers.
Local Programs
A limited number of local governments offer programs to help residents facing financial difficulties, and typically only offer assistance with basic needs, such as housing. For instance, the Housing Assistance Program of Greater Kansas City in Kansas City, Missouri administers the Housing Assistance Program for disabled, low-income residents. If you meet disability requirements, the program may help you pay your mortgage, rent or utilities. The program does not offer assistance for other types of debts, such as credit card, phone, legal or repair bills. Program administrators base grant amounts on the size of your household.
Other Government Programs
You may consider government programs that help you manage certain types of debt. If you have more than one federal student loan, the U.S. Department of Education can help combine your debt through the Direct Consolidation Loan program. The program enables you to make a single monthly payment and extend your repayment terms.
If you face financial difficulties due to mortgage debt, you may find relief through the federal Making Home Affordable program. MHA plans can help you reduce your monthly payments through loan modifications on first and second mortgages. Certain MHA plans offer interest rate reductions and loan term extensions up to 40 years.
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