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Debt Help

Debt Help Available for SNAP Applicants

Debt help is available to Supplemental Nutrition Assistance Program (SNAP) applicants from various sources, such as government assistance programs, nonprofit organizations or private financial institutions. Certain candidates may be eligible to enroll in a debt management plan, whereas other types and amounts of debt may qualify for debt consolidation from public or private lenders. As a last resort, the government also offers relief in the form of two types of bankruptcy to candidates who are unable to repay their debts. The guide will help you learn about the different ways SNAP applicants may qualify for debt help below.

Additional Resources Debt Help

How Debt Can Cause Financial Strain

Debt can be a large burden to families, resulting in greater instances of financial strain and lack of necessary resources. Credit card companies and mortgage lenders consider your debt to asset ratios when deciding interest rates as well as whether to lend to you. If you have a large amount of debt, this can keep you from being eligible for homeownership, car ownership or a line of credit. Additionally, if you are a parent and your child needs assistance with a student loan, a high debt burden can reduce your ability to assist in co-signing for a student loan. Debt that goes into default, meaning that you do not meet the agreed payment arrangement, will result in negative information on your credit report. These kinds of derogatory marks can stay on your credit report for up to seven years. If you are currently receiving food assistance and are struggling to manage your debt from student loans, personal loans or other sources, you can find support to help manage your debt and begin to pay it off. Gain information about your debt help options so you can find assistance that will provide the best results for your situation.

Debt Help Eligibility

Various debt help resources are available to SNAP applicants to pay off debts that might have originated from credit cards, loans or other sources. However, eligibility requirements vary according to several factors, including:

  • The type and amount of debt owed
  • The applicant’s credit history and present income
  • The public or private financial institution that is offering debt help

There is no general guideline regarding the eligibility of candidates or types and amounts of debt. Thus, a financial institution may offer debt help to pay off certain types of credit cards, but not all, and a candidate may qualify to receive one form of assistance, but not another. Each debt is evaluated individually and taken into consideration depending on a candidate’s financial ability to repay it.

Additional Resources Credit Cards

How to Enroll in a Debt Management Plan

Debt management plans (DMPs) are offered by credit counseling agencies as an option for candidates who are unable to pay off debts as a viable form of assistance. This plan consists of delegating the management of debt to a credit counseling organization, which will receive monthly payments from candidates and pay off debt on their behalves. However, to qualify for debt help in the form of a DMP, a credit counselor must thoroughly assess the candidate’s debt and credit history, estimating how long it would take to pay off the total amount owed and whether the candidate can afford to make timely payments on a consistent basis. Creditors typically consider DMPs a reliable method of debt help, eligible candidates may also qualify for lower interest rates to pay off debt.

How to Apply for Debt Consolidation

Debt consolidation is the merging of various debts into a single unified amount. This form of debt assistance typically lowers interest rates significantly and can be provided by government agencies, nonprofit organizations or private financial institutions. This consolidates multiple monthly payments into one monthly payment, which is particularly helpful to those whose debt is distributed through several different sources that individually charge interest and require minimum payments. While certain credit cards and loans may qualify to be paid off through a debt consolidation, others may not qualify for this form of assistance. Each source of debt is individually assessed and may have different qualification requirements. Government credit counseling for consolidation is offered by services accredited by the National Foundation for Credit Counseling (NFCC) and the Financial Counseling Association of America (FCAA). Several financial institutions such as banks, credit card companies and credit unions also offer private alternatives for credit card debt. Certain financial institutions may pre-qualify candidates for debt consolidation. In other cases, SNAP applicants may have to request counseling from a financial institution and wait for a response. To prepare for an application to take advantage of options, a candidate must authorize the potential lender to access the list of debts detailed on his or her credit report, as well as complete a monthly budget that details income and expenses and determines how much money is available each month to meet debt consolidation payments.

Additional Resources Debt Consolidation

How to File for Bankruptcy

Debt help may also be offered through bankruptcy, which a last-resort method to pay off debts that is offered by the government to those who are considered unable to eliminate debts through any other manner. There are two types of personal bankruptcy:

  • Chapter 13 bankruptcy is offered to candidates with a steady source of income to create a feasible payment plan that allows a debt to be gradually paid off.
  • Chapter 7 bankruptcy, also known as a straight bankruptcy, involves the liquidation of all assets from candidates in order to pay off their debt.

Because bankruptcy is considered a last-resort form of relief, candidates must typically undergo pre-filing credit counseling courses and provide monthly income statements and tax returns that justify their need to file for Chapter 13 or Chapter 7 bankruptcy. Due to the complexity of this procedure, to attain debt help through bankruptcy, candidates will likely need the assistance of a qualified attorney to file for bankruptcy.

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