You can obtain veteran debt relief in one of several ways. If you can't afford to pay your debts, filing bankruptcy may be the best way to obtain veteran debt relief.
Written by Kristin Turner, Harvard Law Grad.
Updated October 8, 2021
If you're a veteran, you may have options for obtaining veteran debt relief that are not available to other individuals.
The Department of Veterans Affairs has a Debt Management Center with a lot of helpful information on its website. You can also call the Veteran’s Administration by calling 1-800-827-0648 for more information regarding veteran debt relief.
There may be veteran debt relief options available, including bankruptcy. It's a good idea to explore all veteran debt relief options before choosing the best veteran debt relief option for you.
Coping with Debt — Know Your Veteran Debt Relief Options
Coping with debt can be very difficult. Deciding which veteran debt relief option is best for you can be overwhelming.
Below are several ways of dealing with debt.
Debt Consolidation Loans
A debt consolidation loan is often secured with collateral, such as your home. You must be very careful when consolidating debt with a home loan. If you cannot pay the monthly payment, the mortgage company can foreclose on your home.
You could lose your home by defaulting on a debt consolidation loan. You are less likely to lose your home if a creditor obtains a judgment.
Debt consolidation loans may not help if you are struggling to pay your bills. Instead of resolving the debt problem, this veteran debt relief option only combines the bills into one payment.
Debt Consolidation Companies
Debt consolidation companies work with your creditors to combine debts into a single monthly payment. You pay the debt consolidation company, and it pays your creditors.
However, debt consolidation companies charge large fees for their services. In addition, your creditors do not have to work with the company.
You may pay more in interest and fees than you owe by choosing this veteran debt relief option. Furthermore, creditors continue to report negative information on your credit report.
There may be a better veteran debt relief option for you.
You can negotiate with your creditors to settle debts for less than you owe on the accounts. Debt settlement requires you to have access to a large sum of money to pay lump sums to creditors.
You send offers to each of your creditors stating you will settle the debt for a percentage of what is owed. The creditor may deny the offer or make a counteroffer.
If the creditor accepts your offer, it usually wants the money within a few days.
However, this veteran debt relief option has its disadvantages.
Your creditors may not be willing to settle for less than you owe on the debts. Therefore, you may still have a debt problem even after you spent your money paying some creditors.
Also, if a creditor accepts your offer, it reports the remaining balance on the account to the IRS. You may be required to claim the amount “written off” by the creditor as income.
Again, you may have a better option for veteran debt relief.
Filing for Bankruptcy Relief
A bankruptcy filing may give you the veteran debt relief you need at an affordable price. Filing a bankruptcy case can also protect your income and your property from creditors and the court.
If you have no way to repay your unsecured debts, you may want to consider filing a bankruptcy case. Also, if the total of your unsecured debt equals one-half or more of your gross income, it may be time to look at a bankruptcy filing.
Filing a bankruptcy case can get rid of your unsecured debts. In some cases, you do not repay any of the unsecured debt.
Hiring a bankruptcy attorney to help you is wise if you can afford to pay the attorney fees. Bankruptcy attorneys provide sound legal advice for those searching for veteran debt relief.
However, if you cannot afford to hire a bankruptcy attorney, you can still receive the veteran debt relief you need.
How can filing Chapter 7 or Chapter 13 help you?
Filing a Chapter 7 Bankruptcy Case
Choosing a Chapter 7 bankruptcy case as a form of veteran debt relief can help you get out of debt within six months.
A Chapter 7 case is available to individuals who make below the median income. You must qualify by passing the Means Test, which compares your income to the median income in the area of your residence.
You can discharge your unsecured debts while keeping your property.
A Chapter 7 bankruptcy petition can eliminate credit card debt, medical bills, personal loans, and other unsecured debts. You do not pay any money to creditors whose debts are discharged in bankruptcy.
Filing a Chapter 13 Bankruptcy Case
If you do not qualify for a Chapter 7 case, you can file a Chapter 13 case seeking veteran debt relief.
A Chapter 13 case allows you to reorganize your debts into a lower monthly payment. It works like debt consolidation, but creditors cannot choose whether or not they participate.
In most cases, debtors pay a small fraction of what they owe to unsecured creditors.
When they complete the Chapter 13 repayment plan, any balance owed to unsecured creditors are discharged. In other words, you are not legally liable for the remaining balance on a discharged debt. The remaining debt is also not reported to the IRS as income in a Chapter 13 bankruptcy case.
For many veterans, a Chapter 13 bankruptcy case is an affordable veteran debt relief option.
You Can File Bankruptcy Without an Attorney
One of the concerns many people have when considering bankruptcy for veteran debt relief is the cost to file bankruptcy.
The majority of the cost for debtors is the fee paid to the bankruptcy lawyer. However, you can still file for bankruptcy relief if you cannot afford to hire an attorney.
You do not need to fight this battle alone. There is an option for veteran debt relief you can afford. You can file your own bankruptcy case to get out of debt.
In some cases, you may qualify to waive the filing fee and waive the fee for the bankruptcy courses. If you qualify to waive these fees, your cost to file bankruptcy seeking veteran debt relief is extremely low.
Before you pay a debt consolidation company for veteran debt relief or borrow money to pay your creditors, you should learn more about how Upsolve helps people obtain veteran debt relief. You may be surprised at how easy it is to file bankruptcy without an attorney.