Debt consolidation can be a real hassle, especially if you don’t have any money in which to make payments. That’s why the government has a system in order to provide you with a way to pay off your debts without slipping further into credit disaster while you do it. Government debt consolidation loans can be a great way to pay off your debts and get back on your feet. These government debt consolidation programs also provide you with trained experts that will help you work out your finances and avoid problems like these in the future. In this article, we explain how government debt consolidation loans work and the different types of loans that you can get.
What Is A Government Debt Consolidation Loan
A government debt consolidation loan is a loan made by the government to help you pay off all of your debts in one monthly payment. The way it works is that you request a certain amount of money from the government in order to pay off your debts and then you simply pay back the loan at a low monthly rate. Government debt consolidation loans can be tricky but they can also save you from a lot of distress and inconvenience that you would’ve encountered by going through another loan agency. When you get a government debt consolidation loan, you know that you will be secure and that you won’t be cheated by the fine print.
Types of Government Debt Consolidation Loans
When you get involved with government debt consolidation, you are provided with several options that can each help you to get out of debt and guide you along the way to financial independence. These types are the Standard Payback, the Extended Payment Plan, the Graduated Payment Plan, and the Income Contingent Plan. You may or may not have a choice in the type or types of government debt consolidation loan that is available to you. Regardless, you should try to make the best of the situation by taking advantage of whatever these programs have to offer.
Standard Payback Plan
With a standard payback plan, you are responsible for paying a set amount every month until the loan is paid off. In a standard payback plan, the monthly rate never changes unless you specfically request to lower the amount and extend the life of the loan. A standard payback plan is the most common type of government debt consolidation loan and is, in fact, the most common type of loan structure in general. A standard payback plan is presented by the government agency that is providing you with the loan and you may negotiate the monthly rate to fit your financial capabilities. Remember that even when you are out of debt, you will still need to stay concurrent on all of your other bills in addition to the government debt consolidation loan.
Extended Payment Plan
The extended payment plan is used to increase the lifespan of the loan while decreasing the amount that you have to pay every month. This is usually the result of a standard payback loan that has been negotiated to fit the consumer’s needs. An extended payment plan can last as long as it needs to in order to pay back the loan, plus the interest rate. In order to get an extended payment plan, you must negotiate with the agency that is offering you the loan. In some circumstances, a loan can start off as a standard payback plan and then become an extended payment plan later on.
Graduated Payment Plan
A graduated payment plan starts off with a very low monthly rate until a predetermined time in which the monthly rate increases. A graduated payment plan is used to provide the consumer with enough time to get back on their feet and start putting some money aside after they are out of debt. A graduated payment plan is usually accompanied by an on-call agent that will help you work out your finances.
Income Contingent Plan
An income contingent plan is a government consolidation loan that takes your income into account when deciding your monthly rate. An income contingent plan can either help you or make things worse, depending on how much money you make. It is important that you look at all of your options, including the income contingent plan, to see what works best for you. Government debt consolidation loans can be very helpful but you have to do your part. The choice to get out of debt is up to you.