Debt Relief Grants From The Government - How Do They Work?

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Debt Relief Grants From The Government - How Do They Work?

Sunday, January 6th, 2008 Subscribe To Our Feed

Lets get things straight - regardless of what you may have read in some advertisements, the US government does not offer grants for private individuals to pay off their bills. While there are many government initiatives where a person can apply for funding grants, debt relief grants from the government do not actually exist. In fact, many of the advertisements selling information on how to get out of debt legally, are in reality advocating that you apply for bankruptcy, which is under the auspices of the federal US government, but is not in any way related to their grant program.

There are, however, some debt mitigation programs that may help those encumbered by unrealistic student loans and others who face the prospect of a mortgage foreclosure. These are provided to the individual only if they meet some very strict criteria in qualifying for any of the programs. Again these programs are not necessarily debt relief grants given by the government. The government has the right to forgive all or part of a federally-backed loan, but these actions should not be misconstrued as debt relief grants from the government.

While the government does not advocate individuals filing for bankruptcy, it understands that in some instances this course of action may be the only one available for a person to get out from under burgeoning debt and to enable them to start over again. Some companies may advertise how debt relief grants made by the government will eliminate their debt. They are wrong - a Chapter 7 Bankruptcy is the only way in which this can happen.

Criteria For Bankruptcy Is More Stringent

Recently, the federal government recognized that some individuals were using the bankruptcy court to get out of paying their financial obligations and took the steps to insure that creditors were prejudiced by this situation. These days the newly introduced rules require individuals to participate in budgeting guidance sessions before they can seek bankruptcy relief.

Chapter 7 Bankruptcy however, is not necessarily the only avenue available to those looking for debt relief grants from the government. Chapter 13 Bankruptcy also allows individuals to pay back their obligations over a negotiated or set period of time, which is based on the court’s new rules. The only stipulation is that the person seeking financial relief has enough regular income to meet the repayment demands as stipulated by the court’s trustee.

Both types of Bankruptcy Chapter 7 and 13 may seem like debt relief grants from the government but they are not. In reality, with a Chapter 7, the individual may have to relinquish property to be sold by the court to satisfy some of the obligations. With a Chapter 13 bankruptcy, as long as the person meets the monthly payments, they are allowed to keep their encumbered holdings.

So if you are experiencing severe financial hardship through mounting debts get information on some of the possible solutions to your problems, but before declaring yourself Bankrupt consider all the other options available to you.

The New Bankruptcy: Will It Work for You? (2nd edition)