Everything You Need to Know About Military Debt Relief

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Kristin Peters
Kristin Peters
April 02, 2019

Many military families find themselves facing overwhelming debt. Sometimes the debt accumulates gradually through small purchases. Other times, the entire debt can be traced back to a single cause, like an unexpected illness, student loans, expensive car repairs, or even taxes owed. No matter the source of your debt, finding relief is important. Fortunately, military members and their families have several options when seeking to resolve their debt, from DIY debt management to professional debt relief services.

Military Debt Statistics

For the most part, military members go into debt for the same reasons as other people. Although military families do face some unique challenges and added stressors while their loved ones are deployed, deployment itself does not directly cause debt. Still, statistics do suggest military families are more likely to be in debt.

For instance, a survey of 700 military members and 100 military spouses conducted by ConsumerCredit.com found the following:

Everything You Need to Know About Military Debt Relief
  • 91% of military families have at least one credit card, and 36% have at least four. For civilians, those numbers are 69% and 26%, respectively.
  • 41% of these families owe at least $5,000 in credit card debt, 27% owe at least $10,000, and 10% owe $20,000 or more. The percentage of civilians who fall into those categories is lower across the board: 28%, 16%, and 7%, respectively.
  • Of those who had at least one card open within the last 12 months, only 25% of enlisted personnel paid off their balance in full each month. Among civilians, that number is 41%.
  • 93% of military members reported having a mortgage, compared to 64% of civilians.

Even when direct comparisons are not available, the statistics are troubling. Many military families are struggling to cover their normal household expenses with their income, let alone any large or unexpected expenses.

DIY Debt Management

If the statistics above reflect your current situation, your next question may be whether you can resolve debt on your own. In many cases, the answer is yes. As long as you have the means and motivation to do so, DIY debt management is often the simplest choice. If you decide to handle your debt yourself, follow these steps:

  1. Get organized. Add up all your income sources and your expenses, then make a budget. You can find step-by-step instructions and worksheets on several sites, including the FTC’s consumer.gov site. You should also make a list of your debts, noting the total balance, interest rate, and minimum monthly payment for each.
  2. Create a repayment plan. Once you know how much you owe, you can come up with a plan to pay off your debt. Determine how much of your income you can afford to put towards debt repayment each month. Decide which debt you will pay off first, and focus on one debt at a time.
  3. Consolidate your loans. This step is optional, and it isn’t the best choice for everyone. However, some people find that consolidating all their debt into a single loan makes repayment simpler and, depending on the new interest rate, less expensive. Student loan consolidation may be particularly beneficial.
  4. Appoint a money manager. Select one person within the family to handle your finances. Keeping your debt repayment plan on track is easier when a single person is in charge of your money.
  5. Spend less and earn more. Make up for budget shortfalls and pay off your debt more quickly by attacking one or both sides of the financial equation. As a family, look for ways to lower your expenses and increase your income.

Debt Relief Education

Remember that the key to successful DIY debt management is education. The more you know about financial management, the better equipped you will be to get and stay out of debt. You should also research federal programs and laws that may offer you relief. These include the following:

  • Servicemembers Civil Relief Act (SCRA) — Postpones or suspends certain obligations, including some types of debt, while a servicemember is on active duty.
  • Joint Federal Travel Regulations — Provides a cash allowance to military members whose landlords are being foreclosed on.
  • Military Lending Act — Limits the interest rates and fees charged to military personnel for payday loans, vehicle title loans, and refund anticipation loans.
  • Homeowner’s Assistance Program — Provides financial assistance to military families who must move and have difficulty selling their home.

Professional Debt Relief

Those who are struggling with debt they cannot afford to repay can turn to a debt relief company for help. These professionals can help you examine your options, negotiate with your creditors, and get your finances back on track. Here are a few of the options available:

  • Credit Counseling: Many debt relief companies facilitate debt management plans for eligible borrowers. If you qualify for one of these plans, your credit counselor will work with your creditors to create a personalized repayment plan that fits your budget. Often, they can negotiate more favorable terms on your behalf, such as lower interest rates, so your money goes further. You will have a clear path to paying off your debt within the next three to five years, and you will no longer be dealing directly with your creditors.
  • Debt Settlement: Debt settlement is similar to credit counseling, but it’s more extreme. With debt settlement, the debt relief company works with your creditors to settle your debt for less than what you owe. This can be done as either a lump-sum payment or an installment plan.
  • Bankruptcy: If all else fails, you may be able to file for Chapter 13 or Chapter 7 bankruptcy. These options will do the most damage to your credit score, showing up on your credit report for seven and 10 years, respectively. Chapter 13 bankruptcy allows you to reorganize your debts and pay them off in three to five years, similar to credit counseling. Under Chapter 7 bankruptcy, on the other hand, many types of unsecured debt can be discharged altogether. However, student loans, tax debts, and child support will not be affected.

If your debt is more than you can manage on your own, let Solvable help. We can help you find the military debt relief you need by matching you with one of the highly rated companies on our site. Every company we recommend offers a free consultation. Click the purple “Get Help Now” button or call 855-324-1775 to get started.

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