Does a Donald Trump debt relief program exist?
New legislation is being proposed right now by the Trump Administration. The objective of this new legislation is to improve the existing federal student loan relief and forgiveness options. Technically speaking, there is no “Donald Trump Debt Relief Program.” If you come across a company that’s offering a debt relief program and they pitch to you that it’s the “Donald Trump Debt Relief Program” it’s a scam.
The following article will explain the best debt relief options available in 2019. These options can be used to resolve student loans, credit cards and almost any type of unsecured debt. However, before we reveal those options, let’s first take a closer look at Trump’s new debt relief legislation. Need a debt relief program? Start with a free consultation. You can speak with an IAPDA Certified debt counselor for free at (866) 376-9846. During your free consultation, you will get a quick rundown of each option and can enroll in the plan of your choice.
According to a recent article written by Zack Friedman on Forbes.com, “President Trump released a 10-point plan to reform the Higher Education Act, which is the primary legislation that governs higher education.”
Are you familiar with how the Public Service Loan Forgiveness (PSLF) Program works? You must understand how PSLF works before you can understand the details of Trump’s new legislation. The following image makes it easy to understand the PSLF.
How Public Service Loan Forgiveness (PSLF) Works
Donald Trump’s Proposed Changes to Federal Student Loan Relief Include:
- 1. Limit the amount that a person could borrow in student loans. The goal of this clause is to lower the amount of student loan debt that’s circulating the country. Students will have the protection of not borrowing more than they can afford to pay back. As an additional benefit, colleges may start to lower the cost of college tuition–that’s the goal anyway!
- 2. Simplifies the entire process of getting an affordable student loan monthly payment and loan forgiveness. The new plan will consolidate all of the income-driven repayment plans into one income-based program. For more information on this subject, visit StudentDebtRelief.US and read this excellent article by Sarah Kessler. Also, here is a step-by-step guide on how to consolidate federal student loans, get on an income-driven plan, and loan forgiveness (as of 2019).
- 3. Eliminate the Public Service Loan Forgiveness (PSLF) Program, which offers loan forgiveness after only ten years for anyone working in a public service job (e.g., teachers), versus 20-25 years for everyone else. With the new law in place, everyone will be able to apply for loan forgiveness in only fifteen years. Want to learn how to get loan forgiveness as of 2019? Here are the 16 steps.
- 4. “Under the new law, discharged student loans are no longer seen as taxable income if the borrower is applying for ‘disability discharge.’ Previously, many borrowers elected not to apply for discharge and remained in an income-driven repayment plan because they feared being left with a hefty tax bill that they couldn’t afford.”
Trump’s Credit Card Debt Relief Program
Donald Trump currently has no plans in place to help consumers reduce credit card debt. Relief is available already though, so don’t worry! As of 2019, consumers can choose from three debt relief programs to reduce credit card bills. These three programs include consumer credit counseling, debt settlement, and debt validation to dispute third-party collection accounts. As of 2019, debt validation is the top-rated debt relief program, according to TrustedCompanyReviews.com.
The debt validation program offered by Golden Financial Services includes credit restoration and a money-back guarantee. Additionally, clients end up saving more money with a validation plan (on average), compared to consumer credit counseling and debt settlement. Check out your potential savings on each debt relief program by using this debt calculator here.
The downside with debt settlement and validation is that both plans require a person to be delinquent on monthly payments. A person’s accounts will eventually get written off and sold to third-party collection agencies.
Debt Validation Vs. Settlement
With validation, you are challenging the validity of each third-party collection account. Surprisingly, many collection agencies will then quickly agree to stop collection on the debt and even remove it from a person’s credit report entirely.
If a debt is proven valid, debt settlement offers the creditor a fraction of the balance owed. What’s the catch? The reduced payoff must get paid in one lump sum payment. For example, if a person owes $10,000, debt settlement could reduce the debt to $5,000 (before debt settlement company fees). Creditors agree to this reduction in debt because without the settlement they may not recoup anything. In reality, the banks never really lose money. When a person defaults on credit card payments, the banks recoup their money by showing the debt as a loss and getting a tax credit that same year. The bank always gets paid back in full and even faster when a person defaults on payments compared to if that same person continued to pay only minimum payments for the next ten years.
An Analogy of how debt validation works:
“Just like when you get a speeding ticket, there’s a process you can use to challenge the ticket and get it dismissed. That same theory is used in a debt validation program. Yes, you were speeding, but that ticket gets easily dismissed when properly challenged.” There are laws that regulate credit card and debt collection companies, different laws for each. If these debt collection laws are not abided by, debt can also be either dismissed or invalidated. In either case, once a debt is proven to be invalid or gets dismissed, it can no longer legally be reported on a person’s credit report.
This is why debt validation can be a better choice than debt consolidation or settlement services when dealing with debt collection accounts. Getting the debt collection account removed entirely, from your credit reports, will help your credit score. With debt validation, a debt does not get dismissed; instead, it’s proven to be legally uncollectible. A legally uncollectible debt is one that you don’t have to pay, and it cannot be lawfully reported on your credit report. Here is another blog post that explains in detail — how debt consolidation affects your credit score.”
Consumer Credit Counseling
Consumer credit counseling (CCC) reduces credit card interest rates. You then make a single monthly payment to the credit counseling company. The CCC company then disburses the monthly payments to each of your creditors. You can get out of debt in around 4.5 to 5 years with consumer credit counseling, cutting off several years of having to pay creditors on your own and preserve your credit score.
Why consumers often choose validation over CCC
If a person is already overwhelmed with debt, CCC won’t offer much relief and savings on the monthly payment. With CCC a person’s monthly payment stays around the same as what it was when paying minimum payments on credit cards.
Anyone with high credit card bills has already seen their credit score decline, due to a high debt to income and credit utilization ratio, so they are beyond the point of being concerned about their credit taking a hit.
Debt Validation is 2019’s Most Popular Debt Relief Program
People with high credit cards often choose validation or settlement, the plans that will offer them the fastest escape route to their current debt problems. Debt validation provides a person with the lowest possible monthly payment out of any debt relief program and includes a money-back guarantee and credit restoration.
Aside from using a program to reduce credit card bills, do-it-yourself options can also help (see highlighted options below).
Debt Snowball Plan to Pay Off High Credit Cards & Improve Credit Score
One of the most popular do-it-yourself methods to pay off high credit cards and simultaneously improve credit scores is to use the debt snowball option. This method was once created by Dave Ramsey. Here is an excellent debt snowball and budget calculator tool (all-in-one). This tool makes paying off debt with the snowball method, like sitting on the beach – Easy, Peasy!
When it comes to using the debt snowball method to get out of high credit card debt, start with a budget analysis (which you can easily do with this free tool here).
With the budget tool we’ve linked to above, you can easily find ways to free-up cash and put that money towards paying off debt.
Alternative Ways to Resolve High-Interest Credit Cards
You can transfer your high-interest credit card balances to either a low-interest balance transfer card or a low monthly payment home equity line of credit.
Home equity lines of credit offer the lowest monthly payment and usually include low-interest rates.
Both of these options come with their own set of risks.
By transferring credit card balances on to a home equity line of credit, you are permanently swapping an unsecured debt for a secured debt. By doing so, you are putting your property at risk of getting foreclosed on at some point in the future. If you ever default on the loan, you could lose your property.
When it comes to balance transfer credit cards, they include an up-front fee of between 3%-5% of the total debt amount being transferred on to the card. That’s not the only slap in the face that you’ll get with a balance transfer card, more is coming. The 0% interest rate only lasts for 6-18 months, after that the interest rate can skyrocket above 20%. Make sure to pay off your entire balance during the intro-period while the rate is at 0%, or else balance transfer cards can cost you even more in the end. Also, don’t forget to add in that up-front fee when doing the math on how much you’ll pay when using a balance transfer card.
No matter which debt relief option you end up choosing, start by using the budget tool we’ve shared above. Figure out what type of monthly payment you can comfortably afford to pay. You can then use a debt calculator to calculate how fast you can pay off your debts.