In the United States, a lack of economic opportunities often leads to extreme financial hardships and stress for single mothers. With rising inflation rates and living expenses, several single-mother families are struggling considerably to manage their finances, especially their debts. As of 2022, more than 54% of the 9.7 million single-mother households have gross incomes below the poverty line.
Fortunately, there are government and non-government organizations that offer debt relief grants for single mothers who are unable to pay off their debts, mortgages, and loans. In this article, we’ll take a look at the financial situation of single mothers, along with the different types of debt relief grants available for them. Read the article below to learn more.
Definition Of Debt Relief Grants
If you are a single mother with overwhelming debt problems, then a debt relief grant is a perfect resource for you.
A debt relief grant is a cash award provided to individuals who are unable to pay off their debt due to their poor financial situation. Its primary purpose is to refinance or reduce debt so that the borrower would have an easier time repaying it. Consider applying for a debt relief grant if you are experiencing any of these situations:
- Even if you make drastic adjustments to your expenditure, you have little chance of paying off your unsecured debt, including credit card bills, medical bills, and personal loans, within a period of five years.
- If the amount of unsecured debt you haven’t paid is equal to or greater than 50% of your total income before taxes, then you meet the criteria.
Aside from debt relief grants, other organizations and borrowing firms also offer alternative debt relief options, including:
- Changing interest rates and payment schedules to reduce the amount of monthly payments.
- Waving off a portion of the principal amount owed
- Consolidation of multiple debts into one single loan at a lower interest rate.
You may also consider free government loans or online grants for single mothers to help repay your unsecured debts.
Overview Of Single Mother’s Financial Situation
In spite of the prevalence of single-mother households in America, more than half are still living in poverty. In comparison to married couples and conventional households, single-parent families headed by mothers have it worse.
When striving to fulfill the additional responsibilities and demands of parenting without economic support from a spouse, single mothers are more susceptible to financial setbacks and debt issues. According to a SmartAsset study analyzing the economic status of single mothers in 50 of the most populous U.S. cities, single-mother households face the most financial hardships.
Single mothers fare economically worse in crucial aspects, including five-year income changes, median household incomes, poverty rates, and income percentages compared to their single-father counterparts. Key findings of the report indicate the following:
- The annual gross income of single mothers decreased between 2014 and 2019 in 25 major U.S. cities.
- Single fathers earn approximately 35% more than what single mothers usually earn in 46 major U.S. cities.
Eligibility Requirements For Debt Relief Grants
The eligibility requirements used to evaluate single moms who apply for debt relief grants are listed below.
Qualifying Income Level
To qualify for a debt relief grant, the applicant must meet have a median household income that does not exceed a certain percentage (150% to 200%) of the federal poverty level. In general, federal poverty levels range from $14,850 to $63,220 depending on your location and household composition.
Other Qualifying Criteria
Institutions and organizations that offer debt relief grants also consider other qualifying factors, including:
- U.S. Citizenship or eligible immigrant status
- The applicant is the only wage earner in the household
- Applicant should demonstrate exceptional financial needs
- Applicant’s gross income is insufficient to pay off remaining debts
- The applicant is at serious risk of defaulting on their debt
- Credit history
- Credit score
Types Of Debt Relief Grants For Single Mothers
Personal Loans (Unsecured), Student Debt, and Mortgage Debt are the three primary categories of debt for which there are three different grant programs available.
Debt Relief Grant For Personal Unsecured Loans
In most cases, debt relief grants are provided to single mothers who are unable to pay off their unsecured personal loans. This type of debt does not require any collateral insurance in the event a borrower defaults. However, an unsecured personal loan has a higher interest rate, a lower borrowing limit, and more extensive restrictions on what the loan can be used for.
A debt relief program for unsecured personal loans can significantly help single-mother households who have fallen behind their monthly payments, including credit cards, medical care expenses, and student loans. Additionally, the federal government enacted bankruptcy statutes that can help single moms avoid defaulting on their personal unsecured loans. Filing for Chapter 7 or 13 can help single mothers to discharge any unsecured debt from private or public creditors.
Debt Relief Grant For Student Loans
Single mothers with unpaid student loans may qualify for student debt relief grants. These grants are provided to eligible applicants through the various assistance programs of the U.S. Department of Education. Programs that offer student debt relief include the following:
- Income-Driven Repayment
- Emergency Relief and Federal Student Aid
- Deferment or Forbearance
- Public Service Loan Forgiveness
- Teacher Loan Forgiveness
- Closed School Discharge
- Total and Permanent Disability Discharge
Debt Relief Grant For Mortgage
A mortgage is a type of loan used to buy a home or other real estate properties. Usually, for this type of loan, the property itself serves as the collateral to ensure the loan. This means that single mothers who are at risk of defaulting on their mortgage may risk losing their house. As such, the government offers debt relief grants in the form of mortgage forbearance to help single moms who became delinquent on their home loans.
However, keep in mind that this debt relief is only provided to single moms whose mortgages are backed by state-funded enterprises, such as USDA, Freddie Mac, VA, Fannie Mae, or GSE-FHA.
Due to the demands of juggling work and childcare without a spouse, single moms often experience severe financial difficulties and debt problems. You may qualify for debt relief grants for single mothers if you are a single mom who is unable to pay off their loans.
If you are a single mom residing in New York, find out what types of assistance are available to you in this article from Single Mothers Help.