Introduction

From personal loans to credit cards

What Percent of Veterans Are in Debt?

According to research, nearly 60 percent of Veteran households are dealing with debt in some way. Sometimes the debt creeps up slowly due to accumulation of credit cards and other consumer debts, but in other cases, it can come from one major event such as the loss of a job or major medical bills. Sometimes it’s not possible to figure out how to get out of debt fast, which puts Veterans in a very difficult situation in terms of moving forward financially. Life on a military pension or military disability is not easy if you already have debt. It can also be very hard for Veterans to adjust to civilian life after they’ve gotten out of the military, especially if they can’t get a decent paying job or one quickly enough. Some might turn to credit cards or other loans in the short term and then realize after the fact they are in over their head. All of these circumstances can also create additional stress and shame around the entire experience. What’s important to remember is that by recognizing the challenges of debt you are taking important first steps towards closing this situation out and getting your feet under you financially.

Can the VA Help Me With Debt?

When you’re in debt as a Veteran, one of the best things you can do right away is to explore if there are any military-related support systems to help you. In general, other Veterans and the organizations that support them can be helpful in putting together the pieces for you and giving you a roadmap for what to expect going forward.

Servicemembers Civil Relief Act (SCRA)

One of the most important things to know is that there is a federal law that can help you with financial issues if you’re struggling while in active duty. This is the Servicemembers Civil Relief Act (SCRA). This law caps interest rates on mortgages and credit cards at 6% and prevents lenders from foreclosing on homes. Finally, military servicemembers are also able to cancel leases without penalty under this law.

VA Consolidation Loan

If you have a VA loan on your home, there’s some additional protections to know about as well. A VA consolidation loan could help you if you’re struggling with financial issues. Much like a regular debt consolidation loan

5 Tips on How To Get Out of Debt

Start your debt payoff experience by learning more about what’s included in this lineup. You can use this information to create a realistic picture of your options to pay it off or whether you need to reach out to someone like a bankruptcy lawyer to get more help.

1. Get a Real Picture of What Your Debt Looks Like

If you’re like most people dealing with debt, you probably don’t have a real handle on the situation itself. You might not be aware of just how many bills there are and how much that interest has stacked up. If you’ve allowed yourself to get buried by ignoring the notices or phone calls (or worse yet, throwing away the notices,) prepare yourself for a temporary uncomfortable period to sit down and list it all out. You need to know how much debt you have so that you can make an action plan of what to tackle first. Make a list on paper or in a spreadsheet of everything that’s owed, how much is owed, and whether any of those accounts are already in collections or ramping up for more serious problems like lawsuits. This will help you start to prioritize what needs to be addressed. Here are some examples of kinds of debts you might be dealing with:

• Medical bills
• Personal loans
• Business loans
• Cell phone bills
• Utility bills
• Payday loans
• Auto loans

2. Rank Order the Debts

Then rank order these debts by the possible consequences to figure out which ones to try to pay off first. For example, if you have a medical bill that is about to go into a lawsuit by the creditor or healthcare provider, you might contact them first to discuss payment plans. Or you might research how long it’s been on your credit report or if your state has laws where that debt eventually falls off. Remember that if you reach out and send in a payment this can restart any clocks on that debt.

3. Try To Renegotiate Any Interest Rates

On things like credit cards, you might be able to renegotiate your credit card interest rates to lower amounts, which will decrease your overall payment obligations. This is especially important if your play to pay off any debt has a really long runway, such as 9-12 month action plans. Call your company and ask if you can change your interest rate.

4. Create a Debt Payment Plan

Dave Ramsey and others advocate for a method known as the snowball effect, where you start with the items with the highest interest rate. If you don’t feel like you can make any payments towards your debts or that it would take years to pay them all off with resources you don’t have, this would also be the time to set up a call with a bankruptcy lawyer in your area to see if this is an option you can or should pursue. If you do feel like you could make reasonable payments on what’s owed, create a monthly payment plan to determine how much could be allocated from paychecks and other income sources. If you want to speed up your debt payment plan, one great way to do this is by picking up another job or a side hustle that will help you close these accounts down much faster. If you can, make more than the minimum payment. Most people who are only making minimum payments on all their debts will never make a real dent in the total money owed and this can demoralize you as well as keep you stuck financially. It’s much more important that you target the debts you can pay off in the snowball style if you want to close one down and then direct your next debt payments to the next one on the list.

5. Look To Settle Debts

If you feel like it would be possible to pay down your debts but it’s difficult or would take longer than you’d like, you can also contact these companies and ask to settle debts for less than what you owe. This is a great way to close out these cases and put this chapter behind you. If you file bankruptcy or close out an account for less than what was owed there can be some credit report and credit score impacts, so make sure to consider these and weigh the pros and cons before making a move.

Conclusion

Know that if you are currently in debt, you are not alone. It does not matter the reasons that you got into debt, what is important is that you are taking the action steps to protect yourself and to move forward into a better financial future. What debt consolidation or debt resolution looks like for everyone can be a different picture, but it is important to start taking those action steps towards getting your debt under control. Although it might take some time for you to get back on your feet and to eradicate the debt you have already accumulated, taking baby steps on how to get out of debt can go a long way. Looking for more ways to be more financially stable? Check out our latest blog 7 Secrets to Not Go Broke & Keep $ in Your Pocket.