People into debt can fall victim to scam artists and unfair debt collection services. Not knowing one’s rights as a consumer, the steps to take to properly handle debt collectors, and what government agencies to help get out of debt can make a debtor easy prey for scammers. If one does not do his research or consult a legal professional or credit counselor, he might end up paying a debt that he does not owe or pay more than what he owes.
Debt is not a life sentence that one must live with until he dies. It’s a temporary state of a person’s financial health that turned bad due to some factors. The factors can be bad business decisions, extravagant lifestyle, unemployment, natural calamities, and other unforeseen circumstances that caught an individual unprepared for the worst.
If a consumer does not have the means to pay off the amount he owes, several organizations can help him with debt repayment. However, many scam artists can rip him off and push him deeper into the pit of financial despair. At this point of indecision, a debtor may think that it would be safer for him instead to look for help from government agencies to help get out of debt rather than take his chances with organizations that might worsen his situation.
A consumer looks to government agencies for help when it comes to provision of debt consolidation loans, debt relief programs, or dispense debt forgiveness to troubled borrowers. However, the U.S. government monitors and controls these matters more than finance them but there are significant exceptions. These will be discussed later in the article.
The government may not be able to provide fund for a debtor’s debt repayment, yet it can still help him by providing information that would benefit him in his effort to pay up creditors. It also maintains a list of certified financial advisors and reliable private companies that can guide consumers on which to consult.
If a person into debt suspects that he can never get out of debt on his own, he may look for help from the government. Or else, he will be stuck on the same spot for a very long time. It is ideal to start with the following government agencies before approaching private companies.
Government Agencies that Can Help with Consumer Debt
The National Institutes of Health (NIH)
Only debtors in a health profession that are taking doctoral degrees may be qualified to be granted loan forgiveness of up to $35,000 annually provided that after graduation they work in the field of medical research. More details are available about the Loan Repayment Program or LPR on the NIH website.
The Federal Trade Commission (FTC)
A consumer looking for information on how to remove his debt can find plenty of tips that will be valuable in his pursuit of financial freedom. There he can learn about assessing a credit counseling agency with his state’s Attorney General’s office; knowing the difference of a debt settlement plan to a debt management plan, and other relevant information that a consumer could arm himself.
One might also find very helpful the budget worksheet template at the FTC site which he can use as a guide to removing unnecessary expenses and speed up debt repayment. There is a considerable amount of consumer help information published on the site that a debtor could look into.
The United States Department of Justice
Through its website, a consumer can find the list of authorized credit counseling agencies and debtor education providers published on the United States Trustee Program & Bankruptcy section. Information about evading a foreclosure can also be found on the site. Although the majority of information centers on bankruptcy, it is still worth knowing the processes for handling debt and dodging debt-related scams.
This website is being managed by the federal government and offers ample information on how to manage debt. One with a federal education loan can learn how to not get defaulted, consolidate all loans, and cancel a loan with various methods. If a debtor wants to reduce monthly payments, he might find useful the income-based repayment and loan consolidation plans. The downside to these plans is the incurrence of higher interest on the repayment duration of the loan.
The Consumer Financial Protection Bureau (CFPB)
The CFPB is the consumer’s ally because it advocates consumer rights and opposes disreputable companies trying to exploit American consumers. Established after the Great Recession, CFPB is where victims of a financial scam can place a formal complaint so that the government agency can act on the illegal action and generate relief for the aggrieved consumer.
The CFPB has already produced over $12 billion in relief for the victims of financial scams or illegal practices. It also published an abundance of resources on its website to provide information to American consumers to enable them to make the best financial decisions. The CFPB works every day to make lives better for Americans.
How Government Agencies Work in Terms of Debt
If one is looking into government debt relief loans and government debt consolidation programs as a means to resolve his debt issue, he will not find them there. Here are how government agencies operate when it comes to personal debt matters.
1. The government does not provide loans one can use to pay off personal debt.
2. It does not authorize debt consolidation programs from private companies. But the Department of Justice issues lists of authorized credit counseling agencies per state.
3. The U.S. Government does not directly recommend debt relief programs to consumers. It does not provide grants to individuals either. It only regulates the operations of private companies providing settlement services.
- Debt Relief Grants – Individuals with debt cannot receive grants for debt relief directly from the government. The grants are awarded only to non-government organizations, state agencies, and universities. However, they can coordinate with the local entity where the grants were given to know what local programs they can apply for to reduce their debt.
- Monitored Debt Relief – The government does not finance or support even this kind of debt relief. The Federal Trade Commission only controls the debt settlement services of private companies through the enforcement of the Telemarketing Sales Rule.
- Payday Loans – The government does not carry payday loan debt relief. Yet, it limits the activities of the lenders. Take for example the CFPB rule that requires lenders to perform background checks to show that the loans can be afforded by the consumer. It also set the restriction on the number of loans a consumer can borrow.
4. The federal government supports debt forgiveness to tax obligations and student loans. Few agencies, however, extend indirect assistance with the mortgage, medical and credit card balances.
- Credit Card Debt – The government, both federal and state, provide limited types of debt forgiveness.
- Medical Bills Balance – Debt forgiveness is not directly given by the government. Yet, various public programs can assist debtors with leftover bills.
- IRS Taxes – The Internal Revenue Service (IRS) is under the executive branch of the U.S. government which is why debt forgiveness can be dispensed.
- Mortgage Principal – Mortgage debt forgiveness is not sponsored by the government. But the U.S. Department of Housing & Development (HUD) provides free counseling while a federal law offers homeowners a temporary tax break.
- Student Loans – The U.S. government can directly provide debt forgiveness to federal student loan like the one who establishes the rules and dispenses the loans is the Department of Education.
The Bottom Line
It is understandable to seek intervention from government agencies to help get out of debt. Yet, the government can only help to a certain extent, and providing loans and debt relief programs is not part of it. It can, however, guide a consumer to authorized people or entities that can give the financial assistance that he sought for in order to pay his debt.