Texas Debt Relief for Debt Woes
The total credit card debt in America reached $90.6 billion in the fourth quarter of 2022, marking an increase of 18.5% from the previous year, according to TransUnion.
The average credit card interest rate is around 23.77%, making it tough for Texans struggling with $30,000 or more of credit card debt. For individuals in such a situation, Texas Debt Relief Programs can provide solutions, according to Debt Org.
Texas Debt Relief Programs
The Texas debt relief programs have distinct approaches to addressing your financial issues. According to Debt Org, these include debt management programs, debt consolidation loans, debt settlement, nonprofit debt settlement, and bankruptcy.
Debt Management Programs: This Texas debt relief program helps reduce credit card interest rates to a manageable level, typically around 8%. By enrolling in such a program, individuals can pay off their debts faster and improve their credit scores without the need for collateral. It is suitable for those who have high-interest credit card debt and can commit to making on-time monthly payments for 3-5 years.
- Where to find it? – Debt management plans can be obtained through nonprofit credit counseling. These agencies collaborate with creditors to decrease interest rates to a reasonable level. The plan is applicable to unsecured debts such as credit cards, but not secured debts such as homes or automobiles.
Debt Consolidation Loans: This Texas debt relief program could address the problem if the interest rate is low. It combines multiple credit card debts into one loan with a single monthly payment to a bank or credit union. The interest rate depends on your credit score and collateral. Qualifying for a consolidation loan may be difficult with a poor credit score.
- Where to find it? – Debt consolidation loans are available from various sources such as banks, credit unions, and online lenders.
Debt Settlement: This Texas debt relief program enables a borrower to pay a debt for less than the amount owed, typically after negotiating with one or more creditors over a 2-3 year period and saving money in an escrow account. However, this process can be lengthy and harms your credit report for seven years. Additionally, the IRS views forgiven debt over $600 as income that must be reported on your tax return.
- Where to find it? – You can look for for-profit debt settlement companies that negotiate with credit card companies on behalf of the consumer. However, it is important to note that the process can take 2-3 years and the credit card companies are not obligated to accept settlement offers.
Nonprofit Debt Settlement: This Texas debt relief program is a new service offered by nonprofit credit counseling agencies that allow consumers to pay only 50%-60% of their debt. Lenders agree to the terms upfront, with the condition that the consumer has not made a credit card payment in 180 days and makes fixed payments for 36 months. There is 0% interest charged during the repayment period, but all payments must be made on time or the program will be canceled.
- Where to find it? – Search online for “nonprofit debt settlement” to find certified and accredited agencies by the National Foundation for Credit Counseling. However, since the program started in 2021, only a few agencies offer it, and only a few credit card companies and banks participate.
Bankruptcy: Bankruptcy may be the best option for some to get their finances back in order without losing their home or other key assets. There are two types: Chapter 7 and Chapter 13. In Chapter 7, non-exempt assets are sold by a trustee to pay off debts, while in Chapter 13, assets are kept in exchange for regular debt payments to a trustee. Bankruptcy has significant consequences, including a drop in credit score and it remains on your credit report for 7-10 years, making it harder to get future loans.
Texans struggling with $30,000 or more of credit card debt or personal loans can call 800-971-4060 or visit DebtRedemption.com/KXAN for a free consultation. It is important to carefully consider all options and choose a reputable Texas debt relief program that suits your needs.