What Are Veteran Debt Relief Grants?
UpdatedApr 30, 2025
- Several veteran and military programs are designed to help with finances and debt, including VFW unmet needs grants.
- There is no government debt relief program for veterans.
- Debt consolidation, debt management, and debt settlement may offer relief.
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The military provides discipline, as well as leadership and teamwork skills, and a strong sense of responsibility. But veterans don’t always return to civilian life with robust personal finance skills. Financial problems can happen to anybody, but veterans face some special money challenges.
Among these challenges are paying debts and making ends meet. That military discipline can really serve you well as you face your debts head on. And fortunately, there are several forms of debt relief help available to meet these tasks.
As a veteran, you’re entitled to the financial assistance, information, and legal advice necessary to make a successful transition into civilian life.
Types of Veteran Debt Relief Options
There’s no one government debt relief grant for veterans that will get rid of all of your debt. Instead, you can find a variety of government and private programs for managing your debt and finding debt relief.
Government veteran debt relief grants and programs
You may have heard about veteran debt relief grants from the government. Veteran grant programs generally don’t provide veteran debt assistance directly, but you may be able to benefit from them indirectly.
National, state, and local government grants are earmarked for organizations that help veterans. Whether you qualify for help from any of these organizations depends on the details of your specific circumstances.
The Veterans Administration (VA). The VA offers financial benefits that could help you meet your debt obligations. These include military pensions, disability compensation, and allowances for people who have trouble caring for themselves. In addition, the VA offers a variety of financial management tools and educational resources.
State and local programs. Your state or local government may offer additional financial programs that could help you with financial problems. These may include financial assistance, help with preparing benefits claims, or financial education resources. We can’t offer specific information because it varies in every city in the nation. A few resources are noted below.
Nonprofit resources
Nonprofit organizations provide resources that could help veterans in need. For example, they may offer help for people experiencing homelessness, veterans’ debt assistance, mental health counseling, addiction resources, employment training, and job search help.
Nonprofit organizations are often community-based, so they vary. Your local VA should be able to identify organizations in your area. Another useful resource is the National Veterans Foundation (NVF).
Consumer Debt Relief Programs
If you can't find a specific veteran relief program, you can turn to consumer debt relief services that are available to everyone. Here are some common types of consumer debt relief.
Credit counselors
Nonprofit credit counseling agencies offer certified credit counselors who can help you organize your finances and explain methods for managing debt. If you qualify, you may also be offered a debt management plan (DMP).
A debt management plan won’t reduce the amount you owe but gives you a structured plan for fully repaying your debts. As part of this process, the credit counselor may negotiate new payment terms with your creditors, such as lower interest rates or fees.
While in a DMP, you'll make one monthly payment to the counseling agency, which will then pay your creditors. The counseling company may take a fee for these services. The monthly payment you get is set by the credit counselor based on what's required to pay your debts, not what's best for your budget.
Debt consolidation loan
Another way to manage your debt is debt consolidation: refinancing your current debt with a new loan. This could reduce the number of payments you have to make each month.
Refinancing could also make your monthly payments more affordable if you're able to reduce your interest rate. Debt consolidation works best if you have good to excellent credit so you can qualify for a competitive APR on your debt consolidation loan.
As a veteran, you’re eligible to join many credit unions dedicated to active duty members and veterans of the armed forces. This can be worth checking out, as credit unions often have better interest rates and more relaxed approval standards than commercial or community banks.
Debt settlement
If you can’t afford to fully repay your debts, you could consider debt settlement. This is when your creditors agree to accept less than you owe and forgive the rest. Debt settlement is most effective when you can prove financial hardship.
You can negotiate with your creditors on your own or find a professional debt relief program that can negotiate with your creditors for you.
Debt relief companies charge a fee for this service. However, they legally can't charge you until they’ve settled a debt. If the settlement reduces the amount you'd otherwise owe, the fee may be well worth it.
Bankruptcy
As a veteran you absolutely have the right to file for bankruptcy, and it may even give you access to certain benefits reserved for military members. The pros and cons of bankruptcy will depend on which type of bankruptcy you qualify for:
Chapter 7 bankruptcy can eliminate most or all of your unsecured debts, but you might lose some of the things you own. You'll also need to pass the means test. If you can afford a payment, you won’t qualify for Chapter 7. If you’re a disabled vet and you acquired the debt while on active duty, you might not be required to take the means test.
Chapter 13 bankruptcy restructures your debt and puts you on a three- to five-year repayment plan.
Both types of bankruptcy temporarily stop all collection efforts, including mortgage foreclosure.
Either type of bankruptcy filing will negatively impact your credit scores. Your access to new credit accounts is likely to be more limited for a while.
Most people hire a bankruptcy attorney, which is an added cost.
Filing for bankruptcy could jeopardize your security clearance. Consider all the potential consequences before choosing to file.
Additional Financial Assistance for Veterans
Often the best way to make progress on paying down your debts is to get help with your day-to-day expenses. For this type of veteran debt assistance, consider programs such as:
Veteran’s pension. Depending on the length and nature of your service, you may be eligible for a military pension. Inquire through the VA.
Disability compensation. This is a tax-free monthly benefit paid to veterans with certain physical or mental conditions related to their service.
Healthcare. You may be eligible for health insurance through the VA, as well as free coverage for service-related conditions.
Aid and attendance benefits. This is an additional monthly payment for housebound veterans in need of financial help.
VA loans. These government-backed loans make mortgages available to veterans at a reasonable cost. VA loans could help you buy a home or refinance an existing mortgage to make it more affordable.
Assistance for homeless veterans. The VA provides free health care to eligible veterans who are homeless or at risk of becoming homeless. The VA can also connect you with local resources to provide further support.
Help with food security. If you’re having trouble affording meals, the VA’s food security office can help you access the nutrition you need.
The above types of financial assistance may not directly provide debt relief for veterans, but by taking care of other expenses, they may make it easier to keep up with your debt payments.
Legal Rights as a Veteran
A vital form of veteran debt assistance is legal protection against creditors.
Here are some key laws that can protect you.
The Military Lending Act (MLA)
This law applies to personal credit you got during active military service. If you obtained the credit while on active duty, its protections continue after your service is over.
The MLA covers several forms of credit, including payday loans, credit cards, student loans, and unsecured loans. The law caps interest on loans at 36%, restricts creditors’ access to your bank accounts, and prevents you from losing your legal rights even if you sign an agreement otherwise.
Additionally, the 36% Military Annual Percentage Rate generally includes the following costs in calculating your interest rate:
Finance charges
Credit insurance premiums or fees
Add-on products sold in connection with the credit
Other fees, like application or participation fees, with some exceptions
The Fair Debt Collection Practices Act (FDCPA)
The FDCPA applies to all consumers, not just veterans. It limits the methods debt collectors can use to try to get payments from you.
Debt collectors can’t use abusive tactics such as contacting you at work when you ask them not to, publicizing your debt situation, or using deceptive or threatening language.
The Fair Credit Reporting Act (FCRA)
The FCRA also applies to all consumers. It governs how debts and other financial matters can be reported on your credit record. It also covers your rights when disputing information on your credit report.
Those rights include access to all information about you that has been reported to a credit bureau. If you question an item on your credit report, that report must include a notation that the item is under dispute.
Next steps
If you're looking for veteran debt assistance, here are some steps you should consider:
Contact the VA to make sure you're getting all the financial benefits available to you.
Do an assessment of your debt situation. Figure out if it’s possible to meet your payments by yourself, or if you need outside help.
Talk to a debt expert. Start by inquiring about free services to help you understand your choices.
Consider working with a debt relief specialist. If your payments are unaffordable no matter what you do, a debt relief specialist can negotiate to try to reduce the amount you owe.
Each step you take can put you closer to solving your debt problems.
Debt relief by the numbers
We looked at a sample of data from Freedom Debt Relief of people seeking credit card debt relief during November 2024. This data reveals the diversity of individuals seeking help and provides insights into some of their key characteristics.
FICO scores and enrolled debt
Curious about the credit scores of those in debt relief? In November 2024, the average FICO score for people enrolling in a debt settlement program was 586, with an average enrolled debt of $25,411. For different age groups, the FICO scores varied. For instance, those aged 51-65 had an average FICO score of 587 and an enrolled debt of $26,912. The 18-25 age group had an average FICO score of 550 and an enrolled debt of $14,146. No matter your age or debt level, it's reassuring to know you're not alone. Taking the step to seek help can lead you towards a brighter financial future.
Student loan debt – average debt by selected states.
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) the average student debt for those with a balance was $46,980. The percentage of families with student debt was 22%. (Note: It used 2022 data).
Student loan debt among those seeking debt relief is prevalent. In November 2024, 27% of the debt relief seekers had student debt. The average student debt balance (for those with student debt) was $48,703.
Here is a quick look at the top five states by average student debt balance.
| State | Percent with student loans | Average Balance for those with student loans | Average monthly payment |
|---|---|---|---|
| District of Columbia | 34 | $71,987 | $203 |
| Georgia | 29 | $59,907 | $183 |
| Mississippi | 28 | $55,347 | $145 |
| Alaska | 22 | $54,555 | $104 |
| Maryland | 31 | $54,495 | $142 |
The statistics are based on all debt relief seekers with a student loan balance over $0.
Student debt is an important part of many households' financial picture. When you examine your finances, consider your total debt and your monthly payments.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
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Is there a government debt relief program?
The most common form of government debt relief is bankruptcy. But bankruptcy doesn’t always relieve debt.
If the court thinks you can afford a monthly payment, you may be put into Chapter 13 bankruptcy. You’ll make payments on your enrolled debts for 3-5 years and if any balances remain at the end of your program, they’ll be forgiven. About half of Chapter 13 enrollees do not end up having any debts forgiven.
If the court decides you don’t have enough disposable income for a payment, you’ll be enrolled in Chapter 7 bankruptcy, where all of your enrolled debts are forgiven within a few months. In Chapter 7, if you have assets, you might have to sell them.
For both kinds of bankruptcy, participation is mandatory. That means if a debt qualifies and you want to enroll it, the creditor can’t refuse to participate. Some kinds of debts don’t qualify, like federal student loans in most circumstances.
The other kind of government debt relief is for federal student loans. You can apply for a deferment or a forbearance. In a forbearance, interest will continue to accrue and if you don’t make any payments, you'll owe more at the end of the forbearance than you did before. In a deferment, some types of loans continue to accrue interest, but some don’t.
What should I do if I’m overwhelmed by medical debt?
Get help as soon as possible. Many people have been through this, and credit counselors and debt relief specialists are experienced in helping people. They can help you understand your options and guide you toward a solution. The sooner you start, the better those solutions are likely to be.
Can a credit card company sue you if you're on disability?
Yes, credit card companies can sue you for unpaid debts even if you receive disability benefits. However, your disability benefits should be exempt from garnishment, along with Social Security, public assistance, unemployment compensation, veteran’s benefits, and certain other types of income. If you are sued, check on which assets and income can be legally protected.
