Military and veteran debt relief

There are a few government programs meant to help veterans struggling with debt backed by the Veteran’s Administration, or VA. But these debt relief programs rarely extend to credit card bills and other types of private debt. However, there are some programs and protections that can make repaying debt easier both during and after your service.

Debt assistance for veterans and service members

There are several types of assistance that are designed to help veterans and service members who are struggling with loans through the VA.

VA agreement to pay indebtedness

If you receive a VA medical bill you can’t pay all at once, request a payment plan that divides it up into monthly repayments over around three years without interest. Apply by filling out VA form 1100 and submitting it to your closest VA medical center. You’re required to submit this form within 30 days of receiving the bill.

VA compromise offer

If you can’t afford a payment plan, you can also submit a compromise offer. With a compromise offer, you request to settle your account in full at a discount.

Apply by writing a letter to the VA explaining your situation. Include the amount you can afford to pay in full and a financial status report, or VA form 5655. Mail all of your documents to the following address:

US Department of Veterans Affairs
Debt Management Center
PO Box 11930
St Paul, MN 55111

Or, submit them via fax to 612-970-5688. If approved, you have 30 days to make the payment.

VA waiver

The VA also offers waivers to veterans struggling to pay off VA debt. The VA will either waive all or part of your debt and will stop collections if you get approved.

The application is the same as the VA compromise offer application. But you also have the option to make a case for yourself in an oral hearing.

To qualify, you must be a veteran, payee or beneficiary or representative acting on part of the person who has the debt in their name — including a representative of an estate.

VA cash-out refinance home loan

In addition to regular mortgages, the VA backs cash-out refinance home loans. You might use the loan to refinance a conventional home loan into a VA-backed home loan. Or use it to pay off high-interest debt at a low rate and low monthly repayments.

To qualify for VA cash-out refinancing, you must be eligible for a VA mortgage, meet the VA and lenders’ credit and income requirements and live in the home you want to refinance. Apply through a VA home loan provider after filling out a certificate of eligibility on the VA’s benefits website.

Military student loan repayment programs

There are several public and private forgiveness and deferment programs for service members and veterans. Members of the military can defer their loans while on active duty. And you may qualify for partial or even full forgiveness when you get back.

Most private debt relief companies don’t work with federal student loans — and some don’t even accept private student loans. Read our guide to military student loan assistance to read about your full range of options for that type of debt.

SCRA protections

The Servicemembers Civil Relief Act (SCRA) provides protections for service members while you’re on active duty and shortly after you return home. Under the SCRA and while you’re in the service, lenders legally can’t charge you more than 6% interest on debt you took out before your military service. This extends until 180 days after your service ends.

The SCRA also includes protections against default judgements, repossessions and foreclosures. Rented homes and storage facilities are also protected.

Debt relief options

While there are a few debt relief options for service members and veterans, they can be limited. If you have debt that isn’t covered by the VA or SCRA, you might want to consider one of these options.

• Debt consolidation. Ideal for when you owe less than 50% of your salary, debt consolidation involves moving your debt into a new loan or credit card with lower rate and manageable terms. New credit cards, including military credit cards, can come with 0% APRs for the first year or so.
• Credit counseling. Sign up to have an expert to go over your finances, pinpoint the source of the problem and come up with an action plan when you don’t know where to start. Nonprofits often offer this service for free.
• Debt management. Have a credit counseling agency negotiate with your creditors for lower rates and fees when you’re struggling with the monthly cost, usually for a fee.
• Debt settlement. Sign up to have professionals negotiate down your debt by around 30% in exchange for a one-time payment. Save this for emergencies. It can be difficult to afford unless you stop paying your creditors, which hurts your credit and puts you at risk for lawsuits.
• Bankruptcy. Chapter 11 bankruptcy wipes out most of your debts in cases of severe financial hardship, while Chapter 13 gives you a new repayment plan that fits your current budget.

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Debt relief alternatives for veterans and service members

These resources can also help you cut down on expenses, making it easier to get out of debt.

Government benefits

Members of the military get access to a wider range of benefits than your average American. This includes VA-backed home loans and grants, healthcare, childcare assistance, free tax preparation and more. Read more about the opportunities available to you on the USA.gov military assistance page.

Private grants

Some private organizations like Veterans of Foreign Wars offer grants to help military families cover basic expenses. You generally need to have served in the military and face financial hardship to qualify.

Local assistance programs

There are many community organizations that provide additional assistance to service members, veterans and their families. You can look for programs available to you by searching on the National Resource Directory.

Other local programs like mutual aid networks and community pantries can also help cut down on costs.

Bottom line

A handful of programs can help you manage VA and government-issued debt. And a VA cash-out refinance home loan can help you with other bills — as long as you already own a home. But otherwise, there aren’t many debt relief resources specifically for service members and veterans.

Get a rundown of our picks for the best debt relief companies to learn what your other options are — and what to avoid.

Frequently asked questions

What’s VA compensation?

VA disability compensation is a monthly check for veterans with injuries or medical conditions from active duty military service. It’s not technically income, so it’s tax-free.

It’s meant to make up income you may have lost because you had to go to medical appointments or because of your injuries or medical condition. But while you can use it to pay off debt if needed, it isn’t a debt relief program. You have to meet specific requirements to qualify.