Financial Hardship Loan Scams Leave Victims Worse Off, Blog | TNS (2024)

FAQs

Is the $36,000 hardship loan real? ›

You're contacted and told that you're pre-approved for a financial assistance loan (typically $37,000). Be cautious, even if it sounds like you're talking to a real person; scammers have begun using AI voice clones to make their schemes seem more convincing [*].

If you're thinking about borrowing cash to stabilize your finances, a hardship loan is an option to consider. Below we discuss the best hardship loans and what you need to know to compare and apply for hardship loans when you have bad credit.

You do have to pay back a hardship loan. Hardship loans operate similarly to a standard personal loan, but they are generally for smaller amounts with lower interest rates. You'll have to pay back the money you've borrowed, plus interest.

What it's for: Generally, expenses such as medical bills, college tuition, money to avoid eviction, funeral expenses and some home repairs qualify for hardship withdrawal. Requirements: Your plan's administrator usually decides whether you qualify, and you may have to explain why you can't get the money elsewhere.

Once you submit your hardship withdrawal application, it will be reviewed. Generally this takes less than a day. However, if there are any questions about your application, additional review time may be needed. Typically, this further review takes 5-7 business days.

A hardship default occurs when a borrower fails to make payments on their debt due to a severe financial setback, such as a long-term job loss or a medical disability. A borrower becomes “delinquent” when they fall behind on their payments.

If a financial hardship plan, like a loan being in forbearance or deferment, is reported to the credit agencies, it can have an impact on your credit score. How much a forbearance or deferment plan changes your particular score depends on your credit history and the scoring model used.

If you suspect a scam, there are a few important steps you should take right away. Contact your local police or sheriff's office to report the scam. Contact your state attorney general.

Hang up the phone. Do not reply to emails, messages, or letters that the scammer sends. Do not make any more payments to the scammer. Beware of additional scammers who may contact you claiming they can help you get your lost money back.

The easiest way to become a victim of a bank scam is to share your banking info — e.g., account numbers, PIN codes, social security number — with someone you don't know well and trust. If someone asks for sensitive banking details, proceed with caution.

Can I get a government loan to pay off debt? ›

While there are no government debt relief grants, there is free money to pay other bills, which should lead to paying off debt because it frees up funds. The biggest grant the government offers may be housing vouchers for those who qualify.

Your credit report will also include information that indicates you are in a financial hardship arrangement. This information will stay on your credit report for one year and then disappear. Your credit report will not include the reason for your financial hardship arrangement.

You can receive no more than two hardship distributions during a plan year (calendar year for all Guideline 401(k) plans). The amount requested may not be more than the amount needed to relieve your financial need, but can include any amounts necessary to pay taxes or penalties reasonably anticipated.