Government Money to Reduce Credit Card Debt
Credit card debt is a painful burden. Despite what some of the scam artists say and regardless of rumors out there, the government does not give out money to pay for recklessly accrued debt. Your options for paying off a credit card with government money are very limited; that said, here's a rundown on what financial help from the government you may be able to use in certain cases.
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Grants
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Other than educational grants and some research projects, there are no government grants available for individuals. However, if you are part of an organization trying to establish a community project, and you have used your credit card specifically to fund the project, government grants are available to help with this debt. You may search and apply for government grants through Grants.gov website, or you can search for grants from various foundations at Foundationcenter.com.
Small Business Loans
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The Small Business Administration does have limited grants available, but they are usually very specific, such as for participation in federal anti-drug programs. Business owners must apply for loans at the bank just like everyone else. You can use part of a small business loan to pay off credit card debt. However, be aware that when you apply, the process is just like a regular loan: lenders will look at your current debt, credit score and credit history. They also will check on your ability to repay them, meaning cash flow from the business as well as your collateral--your house, car, and other valuable property they can take if you default on the loan.
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Tax Breaks
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According to the U.S. government's Tax Expenditures report, you could be eligible for several kinds of tax breaks. None of them pertain specifically to the amount of debt you have, but your income could change how much you have to pay Uncle Sam. Examples of some tax breaks you can claim to get more money from the government include credit for charitable donations you've made throughout the year, credit for using renewable energy sources and a deduction of the interest on your mortgage. Take time to investigate what other tax breaks you may be eligible for, and you can put the extra money toward your credit card debt.
Bankruptcy
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If your credit card debt is so large that you are unable to continue making payments on it, the government will bail you out under the provisions of bankruptcy. Filing for Chapter 7 means you no longer have to pay anything to your creditors. But in exchange for this, you agree to liquidate your assets, meaning the court sells everything you own, including your car and your house. This money then goes to pay creditors. A less severe form of bankruptcy known as Chapter 13 allows you to keep your property, but it does not clear your debts. Instead, the court consolidates your debts and arranges a repayment plan.
Credit Card Management
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If you do not think bankruptcy is right for you, the Federal Trade Commission has a website offering some alternative ideas for dealing with credit card debt. If you believe your creditors are charging you excessively, harassing you unnecessarily or otherwise behaving fraudulently, you can file a complaint with the Better Business Bureau. If you feel your lifestyle and spending habits have grown out of your control, visit DebtorsAnonymous.org to find a 12-step program may help you.
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- Photo Credit Image by Flickr.com, courtesy of Andres Rueda
