What Are the Different Types of Military Debt Relief?

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  • Written By: Jamie Nedderman
  • Edited By: E. E. Hubbard
  • Last Modified Date: 30 August 2019
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Several options exist for military debt relief specially planned for military families struggling to make their monthly bills. Debt consolidation options exist via credit counseling or a loan that pays off other types of debt, both of which generally create a lower-interest, singular monthly payment. The Servicemembers Civil Relief Act exists to create restrictions on interest rates and other actions taken against military families, typically with regard to mortgages. Another specific option are student loan repayment programs available if enrolled in during enlistment or reenlistment. Debt settlement is a last resort that can completely eliminate debt, but creates a negative impact on personal credit scores and potential problems with military stature.

Military debt consolidation via credit counseling is one form of military debt relief. This type is specifically geared toward families with multiple monthly debt payments for unsecured debt, such as credit cards. Counselors work with lenders for partial debt forgiveness via reduced interest rates or settlements on previous balances. Benefits include a longer time to pay off the debt, revised high interest rates, and one monthly payment, all of which create lower payments overall than multiple individual payments. A military member’s credit score may be assisted by such a program with the regular payments, as long as due dates are met.


Consolidation loans are another option for military debt relief. The individual should, however, make sure that the interest rate is comparable to other available unsecured loans. Caution should be exercised, as sometimes lenders will specifically use the word “military” in their title or when describing the loan when no such affiliation exists. When valid, these loans should have an interest rate that is lower than the high-rate credit cards relieved with such a plan, saving money in the long run.

The Servicemembers Civil Relief Act (SCRA) creates special protection for military personnel in active service or who recently completed active service, along with their families. The primary goal of the SCRA is to postpone or suspend certain types of debt, including mortgage loans. Services include restrictions on the maximum chargeable interest rate, eviction relief, or judicial proceedings in regard to a mortgage. Military members are recommended to seek legal advice when using this benefit.

A student loan repayment program can assist with the payment of student loans if someone is considering joining the military. The program must be known about in advance as it has to be requested when enlisting or reenlisting. 15% of the balance of the loans is paid up to maximums, and each branch of the military has a different maximum. Certain score minimums are also a requirement on qualifications tests in order to receive this type of military debt relief.

If more military debt relief than the previously discussed types is desired, then debt settlement might be considered. Quite simply, someone signing up for debt settlement is choosing to stop payment on debt. Although this is considered complete debt elimination, this method harms the individual credit rating, and counseling should be sought in order for the individual to understand both the implications on future credit needs and his or her status with the military.


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