Debt Consolidation for Military and Veterans

Debt Consolidation for Military and Veterans - Bad Credit

Transitioning from/ balancing military and civilian life can prove an uphill task. And, many active and retired servicemen/ women often face financial troubles, barely being able to keep up with the bills. That often ends in accumulated debts, most of which are defaulted.

Yet, debts should be the last thing to worry you during and after service. Issues about late payment of bills, defaulted loans, accumulated interests, and how they’ll affect your credit score shouldn’t come in the way of your service delivery.

That’s why we have debt consolidation for military and veterans with bad credit. These loan products will help prevent you from sinking deeper into a financial mess or get back to your feet if you already had. We discuss all that.

Est APR
Min Credit score
Amount

Best

LendingPoint

15.49 - 35.49%
600
$2,000 - $25,000

9.95 - 35.99%
550
$2,000 - $20,001

18.00 - 35.99%
None
$1,500 - $20,000

Est APR
Min Credit score
Amount

Best

Navy Federal Credit Union Personal Loan

7.49 - 18.00%
None
$2,000 - $25,000

6.99 - 17.65%
None
$2,500 - $20,000

6.49 - 17.99%
700
$500 - $20,000

APR range
Fees
Terms
Amounth
Unemployment protection

Best

Bank 1

6.95%–35.89%
Up to 5% transfer fee
3–5 years
$1,000–$40,000
No

6.95%–35.89%
Up to 5% transfer fee
3–5 years
$1,000–$40,000
No

6.95%–35.89%
Up to 5% transfer fee
3–5 years
$1,000–$40,000
No

How Debt Consolidation for Military and Veterans works?

Debt consolidation involves taking one loan to clear smaller debts. Consolidation, instead of paying multiple lenders differently, lets you merge your repayments. Such include credit card issuers and other lenders.

Rolling your debts into a single repayment often means paying lower interest rates, which is the main idea behind debt consolidation.

Military members and veterans can also consolidate their loans. They can also take advantage of the 0% introductory interest offer on credit card balance transfer.

A 0% introductory interest means paying 17.3% on APR. Such saves you some bucks on interests hence the ability to pay the loan even faster.

However, debt consolidation loans for mortgage refinancing are only available to servicemen or veterans already having VA home loans.

This way, they can also receive a cash payout to offset their other bills. But, the value of the appraised home must be higher than what you owe on it. Please note, however, that consolidation will often involve paying closing costs.

For credit card debt consolidation, remember, you are taking an unsecured loan and turning it into a secured one with your home on the line.

Tips for getting a debt consolidation with bad credit

Combining debts into a single loan with simplified repayments and the lowest interest rates can make the process of debt elimination quicker and more efficient, especially to military men/ women and veterans.

That’s why the federal government and different private organizations continue to work to make these loans available for these important persons of the society. The following are the options those in service and veterans can explore;

Debt consolidation tips for servicemen/ women

Consolidate before deployment – trying to make arrangements for debt repayment can only be much distraction, and that is the last thing you need while beating the odds of military service. Therefore, you should consider consolidating before deployment so you can grant your military mission the attention it deserves. Remember, consolidation will reduce your monthly repayments and give you a single bill for all debts.

Go for debt management program – debt consolidation and debt management is the most common shot active service member take. Consolidation, however, works best when you have a good credit score and multiple debts. But if you’ve sunk deeper into debts and have a poor credit score, then approaching a credit counseling agency for a debt management program is a shot you should consider taking. They’ll negotiate lower repayments on your behalf and help you get out of debts fast

Ensure your interest rates are reduced – the SCRA – Servicemembers Civil Relief Act – dictates that deployed soldiers on active duty should pay a maximum of 6% on interest rates. Some lenders could be willing to reduce this even further or write it off. Be sure to engage different lenders for the best rates.

Freeze credit cards when deployed – taking on new credit card debts when on active duty will add to your list of worries. Instead of getting caught up with high interests, let your family use available cash instead of credit cards

Consider paying your debts in a lump sum – when transitioning from active duty to civilian life, your pay will likely decrease but your budget still high. Ensure you make arrangements to receive your payment in a lump sum so you can offset multiple loans at once

Debt consolidation tips for veterans

Power of attorney – designating someone over your finances is crucial while away in service. That could be your spouse, close family member, or friend. They need power of attorney to make changes to allotments that require so. While this is important to ensure your finances are managed responsibly, it may not be necessary when you step down from active service. You will, therefore, choose whether or not to take over your finances

Talk to a credit counselor – when on a debt management program, credit counselors will negotiate better loan terms with your lenders on your behalf. This can be a stepping stone towards clearing your debts. Further, they can also help process a waiver for your program fees

Set up pay allotments – for such an arrangement, a certain amount is automatically deducted from your earnings, in your account, monthly, or as otherwise agreed upon by your lender to service your debts. Such kinds of arrangements often attract lower interest rates hence saving you cash in the long run.

Pros and cons

Pros	Cons
Low credit requirements – most veteran and military debt consolidation loan lenders don’t lay much emphasis on the credit score of the borrower. Lenders like OneMain Financial, Navy Federal, and USAA don’t even have a minimum credit score requirement. This makes the loans accessible to everyone and the application process even easier	Borrowers using their homes as security could lose equity to their homes. A single bad decision could have you losing a property a worked all your life to acquire
Longer repayment terms – You’ll have between 10 to 30 years to repay your debt consolidation loan. You could even get something longer than this depending on your present needs and your relationship with your lender. With a longer-term, you’ll have lower, manageable monthly repayments hardly messing up your budget for the month. And that fits the definition of cheap.	Longer repayment terms, though will reduce your monthly repayment amount, will have you paying interest for a long time. That could make it even more expensive than it would have been if you just paid the lenders directly
Low-interest rates – the whole point of consolidation is to find lower rates. Most debt consolidation loans have such. Debt consolidation loans for veterans and active service members have their interest rates capped at 6% making the loans cheapLow-interest rates – the whole point of consolidation is to find lower rates. Most debt consolidation loans have such. Debt consolidation loans for veterans and active service members have their interest rates capped at 6% making the loans cheap	Debt consolidation for military and veterans puts you at the risk of foreclosure
Integrates loans into a single repayment – consolidation helps you bring together different loans into a single debt with single monthly repayments. That makes them manageable and easy to keep up with repayments

Requirements to qualify

Different lenders will vet borrowers differently based on their set policies. However, some basic requirements are similar across all lenders and are required by law.

For instance, a borrower must be a legal permanent resident of the United States at the time of application. The law also requires that a borrower must have attained the age of majority during the application, usually 18 years

For verification, a lender will also require a copy of your ID, valid driving license, or travel passport.

Such details as name, social security number, and address will also be required.

As the name suggests, debt consolidation loans for military and veterans are preserved for those presently serving or who have retired from the military.

Though most lenders won’t be strict on your credit profile, having a credit score above 650 can give you an upper hand. You’ll get even lower rates and flexible repayment terms.

Consider prequalifying to know suitable lenders and the interest rates and monthly repayment you’ll part with. You’ll know all this without negatively affecting your scores unlike in the case of hard credit checks.

Compare different lenders, thoroughly going through their policies and offers till you get the one that best suits your needs. Then submit a formal application and await the lender’s response.

Hot Tip:

Consider getting a co-signor to boost your chances of approval and get you lower rates.

Military and veterans Debt Settlement

The debt settlement option is meant for active servicemen/women and veterans who are not homeowners or who otherwise don’t qualify for consolidation. A larger percentage of such are those with bad credit scores.

The services are offered by debt settlement agencies. They negotiate with your lenders on your behalf to reduce the total amount you owe. This applies to any debts including credit card debts, mortgages, and personal loans.

Medical bills, federal and private student loans are also common debt settlement targets. Presently, debt settlement agencies have also started covering phone bills, utility bills.

Debt settlement is a viable option to bankruptcy, for borrowers who have sunk deeper in debts, auto repossession balances, and apartment leases.

Debt settlement agencies consist of experienced individuals who can drive hard bargains.

However, here’s the catch, and their services may be considered expensive by most borrowers.

Apart from money, there’s also the issue of time involved. It could take a borrower up to 48 months to raise enough money to start negotiations. The whole time, interests and penalties will keep growing, at times to an alarming figure.

And, even after a successful settlement, your credit profile will reflect the same for 7 years. Such will also cost you about 100 points off your credit score.

As you choose a debt settlement company, focus, not only on their fees but their reputation and experience, too. While at it, keep in mind that there are scammers who are robbing you off your hard-earned money.

Be on the watch out for companies with little or no reviews. Also, take companies promising more than anyone can ever deliver as a warning sign.

Hot Tip:

A good debt settlement agency will tell you in advance how much you’ll likely pay after negotiations.

Military and veterans debt-relief options

The following are some of the debt relief options active military members and veterans can explore;

Bankruptcy – bankruptcy erases credit card debts, medical bills, and unsecured personal loans. The whole process takes 3 to 4 months upon qualification. However, please note that bankruptcy does not erase tax obligations and child support. Unless under the federal student loan forgiveness program, student loans are unlikely erased by bankruptcy. The effect on your credit score will be clear, and the stain will stay on your credit report stays up to 10 years. And in case you had a cosigner, filling for divorce makes them solely responsible for the loan.

Debt management plans – with DMP, you can pay off your debts at reduced rates and waived fees. Your chosen credit agency will negotiate these terms and fees on your behalf.