Thursday, December 29, 2011

Federal Grants for Debt

The federal government spends billions of dollars every year on grants and loans for American citizens. You can't, however, use the grants to pay personal debts. Simply stated, the U.S. federal government does not provide free money to consumers who are looking for an easy way out of debt; nevertheless, the government can assist you with some debts, like your mortgage. Don't pay for information and applications that are free, however.

Federal Grant Information

    Health and Human Services, the federal agency that administers grants, states very clearly on its website that it will not provide money for personal financial assistance or debt. The federal government offers grant information and applications free of charge. Note that there is never a fee to apply for a federal grant. You will not need to give personal information, such as your bank account or credit card number. Any company that asks you to provide this information is charging you for something that can obtain for free, and may be operating illegally.

Applying for Federal Benefits

    If you think you may qualify for federal benefits, for example, if you are suffering under the weight of a mortgage you can no longer afford or require start-up capital to begin a small business, you may be eligible for a federally-backed mortgage refinance or modification, or a small business loan.

    The FHA backs a streamline mortgage refinance program that may lower your interest rate -- and your monthly payment -- significantly. You may also qualify for a mortgage modification. You do not have to be late on your payments to qualify, but you must apply through your lender, not the federal government.

    The government also provides loan assistance to those who are looking to start or expand a small business. Microloans are available for amounts up to $35,000. If you need more, consider a small business loan; these are available up to $2,000,000.

    Note that these are loans and require repayment and must support a business endeavor.

If You've Been Scammed

    If you've already provided personal information, such as your social security number, bank account number, or credit card number, to a company that claims it can help you obtain a federal grant, order your credit report. In addition to charging you for information that's already free, you may be a victim of identity theft. Review the reports carefully, and dispute information that's untrue right away; identity theft is a serious crime that can go on for years and could (temporarily) ruin your credit.

    If you suspect that you've been scammed, contact your state attorney general's office to file a complaint. You should also file a complaint with the Better Business Bureau.

Legitimate, Nonprofit Debt Help

    If you're desperate for help with your debts and don't know where to turn, call the National Foundation for Credit Counseling, a nonprofit debt and housing counseling agency founded in 1951. It's helped millions of Americans for little or no fee. It provides bankruptcy counseling, as well.

    The NFCC does not provide loans; it provides credit counseling and a way to pay your unsecured debts in full. It has a sterling reputation. The NFCC partners with local debt relief agencies; you may request a consultation in person or on the phone.

    The federal government won't provide you with a federal grant to repay your debts, but there are solutions. Remember, if something sounds too good to be true, it probably is.

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