Welcome to Ask Lacey, an advice column in which accredited financial counselor and MilMo founder Lacey Langford answers your pressing financial questions. Have a question for Lacey? Submit it here.
Q. I keep seeing these ads for credit forgiveness for veterans. I wanted to know if these companies and/or ads are legit. If they are legit, how does it work? If so, do you know of any particular company or program that legitimately helps veterans lower their credit debt?
Thank you for your question. It's not surprising that you're seeing more ads claiming to offer credit card forgiveness or debt relief specifically for veterans. These kinds of ads pop up around certain times of the year such as Military Appreciation Month in May, back-to-school time or even tax season -- because scammers know veterans are a high-value target group.
The truth is, most of these ads are not what they seem, and you're right to question them.
The Red Flags of Veteran Credit Forgiveness Programs
Bottom line up-front: No official, government-backed credit card debt forgiveness program exists just for veterans. That alone should make you pause when you see ads claiming otherwise.
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Many of the companies behind these ads are debt settlement or debt consolidation firms marketing to veterans. Some are legitimate but charge high fees and use aggressive marketing that can make it sound like they're offering special government programs for veterans. Others are straight-up scams designed to take your money.
Here are a few red flags to watch out for:
- They claim to be part of a "Veterans Credit Card Forgiveness Program." There is no such program.
- They guarantee they can eliminate your debt. No reputable company can make that promise.
- They ask for up-front fees. That's illegal under Federal Trade Commission (FTC) rules for debt relief companies.
- They pressure you to act fast or scare you into signing up. Always a red flag.
These companies may offer to negotiate your debt for less than you owe, consolidate it into one payment or get interest rates reduced. While some of these strategies can work in the right situation, they often come with serious trade-offs, such as hurting your credit score, getting hit with taxes on forgiven debt, or paying a higher interest rate on some debt. Not to mention, active-duty service members and many veterans can receive this help for free on your closest military installation at financial readiness or aid societies or through Military OneSource.
How to Spot a Scam if You Aren't Sure
Sometimes it's hard to tell whether an offer is a scam, especially when it's wrapped in patriotic language or says it's "just for veterans." Here are some warning signs of fraud and scams, from the Consumer Financial Protection Bureau (CFPB) and USA.gov:
- Too good to be true: It's a huge red flag if someone promises to erase your debt completely or fix your credit overnight.
- Pressure to act immediately: Scammers want you to make a quick decision before you can think it through or ask too many questions.
- Request for personal info or payment up-front: Never give your Social Security number, Department of Veterans Affairs (VA) login or credit card info to someone who contacts you.
- Unclear or secretive details: If the person you're talking to won't explain how the program works or gives vague or confusing answers, it's time to walk away.
- They tell you not to contact your lender or the VA: Real professionals won't try to cut you off from your creditors or your benefits providers.
If you think something might be a scam, don't ignore your intuition. You may have caught it, but others might miss the signs. You can help others out and report it to:
- The FTC at reportfraud.ftc.gov
- The VA Office of Inspector General at www.va.gov/oig
- The Better Business Bureau at www.bbb.org
Free Financial Help for Veterans with Debt
Instead of risking a scam or being charged for a debt settlement service, consider trusted resources that are free or low cost and created with veterans in mind.
1. Veterans Benefits Banking Program
In a new partnership with the VA, the Veterans Benefits Banking Program (VBBP) connects veterans with banks and credit unions that offer free financial counseling, safe banking and low-interest products. These providers understand military financial life and can help you build a smart debt repayment strategy.
2. Military Aid Societies
Retired service members may qualify for grants or interest-free loans through one of the military's nonprofit aid societies. Veterans are also eligible after separation, but for only 120 days. The societies offer financial help for debt relief and more. You can find more information about each of them here:
- Army Emergency Relief (AER)
- Navy-Marine Corps Relief Society (NMCRS)
- Air Force Aid Society (AFAS)
- Coast Guard Mutual Assistance (CGMA)
3. Veterans Service Organizations (VSOs)
Groups such as the American Legion and VFW offer emergency financial assistance grants or help you access other services. These aren't as widely advertised, so call your local chapter and ask.
4. Military OneSource
Connect with a free financial counselor who has experience helping military and veteran families. They'll work with you to create a repayment plan, avoid bankruptcy and protect your credit score, all without pushing you into a product or loan.
If You Still Want to Work with a Debt Relief Company
If you're exploring debt relief companies, proceed with caution. Look for:
- Nonprofit status. Money Management International, for example, is one nonprofit.
- Association for Consumer Debt Relief accreditation and good BBB ratings
- Clear fees and written contracts
- No requirement to stop paying your creditors
- No pressure to commit
Avoid any company that tells you to ghost your creditors or charges up-front fees. You've served your country. You deserve support that's transparent, trustworthy and effective -- not sales tactics pretending to support veterans.
Thank you again for your question. I hope this helps you make informed decisions about finding help with credit issues because real help is out there. Use the free resources available to you through the VA, aid societies and legitimate financial counselors. And if you ever feel unsure, pause and check. It's better to wait and verify than to fall into a trap that makes your situation worse.
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