By Chris Mandia
Posted in Auto Loans
Debt is an issue for a huge portion of the American population, especially when it comes to repaying loans and lines of credit. However, there are several characteristics of the military lifestyle that make debt especially difficult to ward off after transitioning to civilian life.
The military can be a strange world. Floating in the Persian Gulf, several miles off the Kuwaiti coast, war looming on horizon–the 2003 Iraq Invasion imminent, I managed to audit my checking account. To my surprise, I was relatively loaded. Asking around, I learned service in the Middle East came with several benefits.
First off, as an enlisted member, warrant officer or commissioned warrant officer, service in a combat zone during any part of a month entails that your military pay is excluded from your income. For all intensive purposes, it’s tax-free.
Coupled with combat/imminent danger pay, a young service member accrues a substantial amount of cash, within a short amount of time. Marrying this with free food, housing and a dependable paycheck on the 1st and 15th, administering ones personal finances tends to take a backseat.
Unfortunately, many of these perks disappear once you’ve transitioned to the civilian sector. Debt can pile up. Direct deposit stops. Free chow, as bad as it may have tasted, begins to sound appetizing. Rent and mortgage replace government housing. Tax free income–just a faint memory jumbled with the fog of war. So it’s understandable many veterans struggle with personal finances upon their release from active duty. But there is hope.
The Veterans Administration offers several solutions for debt repayment help. For veterans who’ve become overburdened with home and college loan debt, the VA suggests forbearance. An agreement between you and your mortgage provider, forbearance suspends and/or reduces your monthly mortgage payments for a predetermined amount of time–thus, allowing you to deal with more pressing short-term financial issues.
As an active duty member/veteran you’ll qualify for additional benefits, including a longer forbearance period with no impact to your credit score.
In 2008, Congress passed the Veterans Benefits Improvement Act. In effect, up to 100 percent of your home equity can be used for a VA cash-out refinance. For more information on mortgage consolidation, visit www.vamortgagecenter.com.
In regards to college loans, the same general forbearances apply. Additionally, your student loan may be discharged if you become permanently disabled. Verification is essential and must be certified by a doctor. If submitted to your lender within 90 days of certification, and the Secretary of Veterans Affairs determines you to be unemployable (100% disabled), you’ve a very good chance at having the loan permanently cancelled.
Active duty service-members and veterans are also eligible for VA debt consolidation programs. Countless men and women since 2008 have found peace of mind by refinancing and consolidating their debt via the Veterans Administration.
Devised to aid home-owning veterans/active-duty personnel, the VA Debt Consolidation Program helps to quickly restructure high interest rate commitments into one manageable payment.
Eligible obligations include: Lines of credit, car loans, credit card debt and 2nd mortgages. Traditionally, these types of loans are coupled with adjustable interest rates, making it extremely difficult to manage a monthly budget, let alone monitor the amount of money being paid in interest each month. With the VA Debt Consolidation Program, you’ll be able to manage your debt with a single low monthly fixed loan. For more information regarding this outstanding program, visit: www.directvaloans.com.
Although steeped in negative stereotypes, food stamps are an excellent way to lessen the burden of providing food for your family…and even yourself. In these trying times, instead of digging yourself deeper into credit card debt, consider the Supplemental Nutrition Assistance Program (SNAP). A federal/state program, SNAP provides low-income households with electronic benefits that can be used at most grocery stores.
The transition from solider to civilian can be a very difficult time, but it doesn’t necessarily have to be. Deservedly, veterans have the unique ability to lessen the burden of their financial responsibilities. The Veterans Administration, along with federal and state programs can aid in that transition. There’s only one catch–you’ve got to take advantage of them.