In these erratic and economically troubled times, many people are in search of debt relief. They may be victims of the housing crisis, or they may have educational or personal loans that need to be payed off. The crash of the housing market created an economic wave that knocked down virtually everything in its path to one degree or another. It created a debt rebound that has affected millions. In response to this, a whole industry claiming the easy availability of debt relief has arisen, especially on the internet.
These sites and advertisements claim that anyone in debt can get large grants to take care of them by merely proving that they need the money. As in most such cases, this is not quite true. Many of the “companies” that make such promises are only after traffic and business. They may try to sell consumers information of packages that purport to tell these unfortunate individuals how to get large grants. These people may pay for these services only to find that they do not qualify for the supposed guaranteed grants.
The real situation is more like this: Under the newly inaugurated Obama administration in 2009, a number of programs were put in place to help ease the national debt crisis and the problems of a shell shocked economy. This is collectively called the American Reinvestment and Recovery Act of 2009.
The thing to realize is that these are not the magically immediate monetary sources that fast talking web sites and marketers make them out to be. The majority or Obama’s economic stimulus package was aimed at tax cuts and instituting various federal programs that have little to do with simply handing out money to individuals. It is on occasion possible to get grants for various necessities under newly instituted or previously existing programs, but it is far from a sure thing.
All that said, there is a chance that you may be eligible for some grants or assistance of some kind. Again though, they are not for the payment of personal debt any more than welfare is for that. If somebody was to save the money they receive from the government assiduously enough to pay off debts, then of course such assistance would reduce debt. But this is seldom the case. By the time somebody is bad off enough to get grant assistance from the government, chances are they are concerned with meeting current expenses and not with paying down money they owe.
There is a something of a new spirit of and policy of assistance for people in the wake of the financial crash, but this takes the form either of the above assistance with simple expenses for the poor and unfortunate, or of assistance to non-profit organizations and businesses that meet certain criteria.
The Economic Reasoning Behind Debt Relief Grants
The reason for debt relief grants is simple; a country that is full of citizens who cannot pay back their debts – either at all or in the short term – is terrible for the economy. Citizens who are paying back loans or addressing debts have to reduce their expenditures to get by. In short, they stop spending money. They stop buying things. This in turn, they say, impacts all industry, which needs a reasonable amount of cash flow and expenditure from consumers and businesses in order to subsist. Thus, the governmenty concludes, it is in the general economic interest to reduce debt in the public and private sectors.
This is all nonsense. What the government is interested in doing is not helping individuals pay back simple debt, but to stimulate the economy by encouraging businesses to reinvest the money they do have, while helping ordinary individuals simply stay afloat. This, they hope will begin to create jobs and greater market activity and turnover in general.
The Truth About Debt Relief Grants
If you think, or somebody tells you, that you can simply apply to the state or federal for a grant for failing to pay back a personal loan or a credit card, you’re mistaken. In fact, if somebody claims this, it’s a tip off that they may be a scam artist of some sort. The government is having enough trouble trying to sort out larger economic problems and they will not simply assist you with your unpaid bills. The purpose of government programs is to restimulate business and enterprise, and that being the case, it attempts mainly to assist businesses. And its conditions for doing this are very specific.
The government does indeed attempt to help failing businesses and nonprofit organizations. There may also be locally available (more on the state level) grants for much needed services like medical care, housing, job loss, and so on for certain individuals. But an individual seeking ordinary debt relief simply will not get that relief from the government. Usually, the only sorts of grants that are relatively easy for individuals to get from the federal and state governments are college grants such as the Pell grant. The other individual and even business or nonprofit grants are harder to get.
To give you a sense of what you’re up against, here are a few of the grant programs available:
The EDA Recovery Act grants
The EDA Recovery Act is part of ARRA. It offers funding to people “that have experienced sudden and severe economic dislocation and job loss due to corporate restructuring.” This is not exactly for debt reduction, but it is in the overall sense that economic assistance always helps reduce debt load. The government has set aside $150 million for this economic assistance program. As of now, all of the funds in EDA have already been allocated, but in the unlikely event that some already received application runs into difficulty or does not get approved, there is still a very slight chance you may be able to get a grant. But again, it’s a long shot.
How does somebody apply for this type of funding? They can simply go to the EDA website and apply at http://www.eda.gov/Recovery, but they may have a better chance if they get assistance from experienced grant proposal writers. But beware, some of these people are sharks, will charge you a lot of money to write the request/proposal and you still won’t get a grant. They could even disappear with you money without doing anything but sending you a form to fill out yourself. So be very discerning about choosing a grant writer.
Minority Business Enterprise Center grants
This is an example of the types of grants non-profits can apply for. It is given to non-profit organizations with minority (black, Hispanic, Asian, etc) leaders or owners. If a business, even if it is a sole proprietorship, is able to gain non-profit status, it can apply for such a grant. It can help them with debt. But again, it is not a sure thing, and if you aren’t a minority non-profit or business owner, you’re out of luck.
Other grants for the elderly, minorities, disadvantaged people, etc.
There are a number of grant programs to assist senior citizens having financial difficulty, again minorities, and people who are in some way disadvantaged (living in poor areas, handicapped, etc.). Mostly you find these grants by consulting local offices such as the Department of Social Services, the Department of Housing and Urban Development, the Department of Health and Human Services, and in the case of medical care, even hospitals. But again, very few of these grants are for what one would consider debt relief. They are mostly for paying much needed fees and so on. In addition, it is often necessary to be affiliated with some sort of non-profit organization to qualify.
If this article seems somewhat sobering, that is its intent. People need to stop being taken in by promises of “free government money” and the like, and realize that what the government really offers in the way of assistance are limited programs with limited amounts of money for specific basic expenses such as housing, education, health, and so on. Your best bet is to just talk to your state based departments for specific types of costs you need help with. Taking the pressure off your current expenditures may allow you to catch up on some of your debt. Getting a better job or starting your own lucrative business is an even better idea. Generally, forget the idea of individual debt relief grants and get more motivated in present time.