When your debt is affecting your marriage, your job, your family or your sleeping habits, it's time to get help. Unfortunately, there's no easy way out, and advertisements suggesting that a free grant is the solution to your debt problem are lying. Don't despair; help is available for those who seek it. The solutions are low-cost, confidential and easier than you might think.
Grants: What They Can---and Can't---Do
Both government and privately sponsored grants are godsends to those who qualify. According to the Department of Health and Human Services, "grants are not benefits or entitlements." Grants are used to improve the lives of citizens as ordered by legislation or private directive. If you need money to fund cancer research, money is available. If you're looking to pay your American Express bill, not so much.
Grant assistance scams are so prevalent that the Federal Trade Commission has issued several warnings about falling prey to official-looking and sounding "programs."
If You've Already Applied
If you've already applied for a debt relief "grant," run, do not walk, to order your credit reports. You're eligible to receive one free report per year from Equifax, Experian and TransUnion. If you don't recognize recent activity, such as a new account, call each bureau to report identity theft. Next, call your attorney general.
Criminals have been asking "grant" applicants to provide bank account, credit card, and social security information to complete the application---except that they actually set up new accounts in your name. Real grant applications never charge a fee and never ask for personal data; if you are asked to provide it, don't.
Mortgage Help
Although it doesn't technically qualify as "grant," the federal government does provide assistance to a homeowner who needs help paying his mortgage. Borrowers who have FHA loans are particularly lucky, since the "streamline refinance" is an easy way to lower your monthly housing debt payment. Known as "HARP," this program simply lowers the interest rate on the mortgage loan. Not convinced? Try the math: it can save hundreds of dollars, and that's just per month.
The "HARP" program has encountered some stumbling blocks, but is worth pursuing if your loan is conforming (not a jumbo). If your lender is participating, your payment is lowered to 31 percent of your monthly pretax income on a trial basis; if you make timely payments, the modification is made permanent. Reductions are achieved by extending the term or lowering the principal or interest (sometimes, both).
Debt Repayment Options
With the grant option extinguished, if you don't qualify for government mortgage assistance, you may be able to devise your own debt repayment plan. Choose your highest-interest loan and put every available cent toward its repayment; only pay minimum payments on the others. When that debt's paid, "snowball" the next loan's payment by adding the first loan's payment to it. This technique is referred to as the "debt avalanche."
You can also opt for credit counseling. It's not government-sponsored, but it is recommended by the Federal Trade Commission as a way to legally repay your debts. Interest rates are reduced, and accounts closed, but made current. You repay the enrolled debts within five years.
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