In the Deep South, Alabama residents aren’t suffering with as much debt as many Americans. This could be because of the fact that they are one of the poorest Southern states. On average, households earn around $40,500, which is the fifth lowest income average in the U.S. The average household credit card debt in Alabama was $5,770 as of 2011. Alabamans still have low credit scores, despite not having as much debt. The state was named as being one of the most frugal states in the U.S.
Overcoming Debt in Alabama
The average credit score within Alabama is 637, making it the fifth lowest in the country. The cost of living here is the 12th lowest in the U.S. The debt that consumes Alabamans is still something that is difficult to overcome for most, due to the low income averages. In order to get out of debt, they will have to turn to debt relief options, such as:
- Debt settlement
- Debt consolidation
There are a variety of debt relief companies that can assist Alabama residents with their financial woes. Finding the best solution for your needs all comes down to the type of debt you have and how much debt you owe.
Debt Settlement Services
Debt settlement is a great option for consumers who have a lot of debt, but that isn’t too high. This involves paying off debts in one lump sum. First, the consumer or an agent negotiates a lower lump sum payment that is more affordable. This is done for each of the debts that are owed, until all of the debts have been paid off.
Debt Consolidation Option
Another Alabama debt relief option is debt consolidation. Unlike with debt settlement, a loan is taken out, which is used to pay off all debts a consumer has. Then that one loan is left to be paid. This is a quicker way to get your credit history cleared and credit score raised. This service is offered by banks, lenders and debt consolidation companies.
There are two options for bankruptcy filings – chapter 7 and chapter 13. When you have a lot of unsecured debts, filing for chapter 7 bankruptcy could be an option. This will eliminate certain debts from your credit history, including credit cards and personal loans. However, it will not get rid of mortgage loans, car loans or liens. Chapter 13 doesn’t eliminate debts, but instead gives you time to pay off the debts owed. Having a bankruptcy filing on your credit puts a major blemish on your credit report, which is why it should be considered as a last option.
When it comes to getting out of debt, it’s important to learn more about budgeting and handling personal finances. Combined with the help of debt relief services could help to make the financial problems go away. All options should be explored when looking for debt relief in Alabama. It’s important to only work with a debt relief agency that is licensed by the state of Alabama.