When debts start piling up and become unmanageable, a debt consolidation loan or program is the best option. If the debts are not paid, many accounts continue accruing interest or late fees. Too many people ignore them for a long time and wind up filing for bankruptcy. Veterans have several resources available for consolidating debts. However, emergency assistance funds cannot be used for debt consolidation. These are some reliable recommendations.
AAA Fair Credit Foundation
This Utah organization will help veterans and active-duty personnel find the right solution. The organization offers free classes to help individuals repair their credit and protect it in the future. Also, there is help available to explore options such as consolidation, settlement and bankruptcy. It is highly rated for helping veterans find local and national consolidation loans with good rates, and the organization knows which lenders have special programs for veterans.
VA Home Equity Loan
For veterans who own their homes but may risk losing the home if debts get out of control, a VA home equity loan is an alternative solution. The funds can be used for nearly anything, and the loan comes with lower interest rates than those assessed to traditional consolidation loans. Since the Military Lending Act of 2006 was implemented to protect veterans from predatory lending practices through the VA, this has been one of the top solutions recommended to veterans who own their homes and have considerable equity.
Debt Management Plan
Hill Air Force Base recommends a debt management consolidation plan to those who have poor credit scores and would not benefit from taking out another loan. Even consolidation loans have higher interest rates when a person has a low credit score. InCharge is a top recommended company with a plan that helps veterans pay off their debts without a loan. The agents help negotiate affordable monthly payments and lower interest rates, which means that there is one fixed payment each month just as there would be with a consolidation loan.
Since there are so many different consolidation lenders and new scams pop up continually, the American Legion recommends contacting the National Foundation for Credit Counseling. This organization keeps a list of reliable resources for non-loan consolidation programs and consolidation lenders. There is also free credit counseling. To find a local agency, call 1-800-338-2227.
What To Do Before Seeking A Debt Consolidation Loan
First, it is important to seek credit counseling through the above reference or through USAA. This helps determine if consolidation, settlement or a DMP is ideal for a specific individual. Also, many veterans do not know that they qualify for reduced loan and credit card interest rates. Contact a local Armed Forces legal assistance office to find out about qualifying discounts. If a reduced interest rate can be negotiated, this will help an individual save a considerable amount while waiting for a consolidation loan or while using a consolidation debt management plan.
While the resources provided by these organizations are verified and researched, it is still important to compare several lenders before choosing one for a consolidation loan. The same is true of settlement and DMP providers. Read independent reviews online about the company, compare the monthly and initial costs and research the organization’s quality of customer service. As a rule, it is good to compare at least five companies.
Try to find consolidation lenders quickly instead of comparing them and then waiting several months to decide. They request credit data, and these inquiries can temporarily reduce a credit score. If they must request them again in a few months, the score may have dropped. This means that the loan rate could also change.