The overall debt situation of Ohio residents is about average in the US, which means Ohio debt relief may not be needed by everyone. But better doesn’t mean scott-free, and average means some are faring worse than others. For those who find their debts to be unacceptably high, there are some debt relief options available.
Bankruptcy as preferred Ohio debt relief option
In 2005, for every 66 Ohio residents in debt, one filed for personal bankruptcy. This is twice is high than the national average for the same year. The incidence rate has since dropped considerably, but it is still an option that many Ohioans have no problem considering. However, since much of the consumer debt in Ohio is for student loans, which is normally not included in the debts forgiven under chapter 7 bankruptcy, it may not be the best move for everyone.
Ohio debt management plans
What may be a better, and much less final solution type of debt relief, would be to get credit counseling and subscribe to a viable debt management plan. There are quite a few approved credit counseling agencies by the Department of Justice in Ohio where trained and experienced counselors will be able to correctly assess the financial situation and suggest ways to handle debt.
The counselor may also help in negotiating with creditors to lower interest rates, waive late or penalty fees, and/or extend payment periods. Most creditors are willing to negotiate because getting less than they should is better than having their debtor default on payment completely.
Once an agreement is reached, the creditors must signify their acceptance of these new terms by signing the proposed debt management plan. Significant savings may result from such negotiations, and a debt management plan will not reflect badly on the credit score.
Debt consolidation for Debt Relief in Ohio
Another option worth considering is debt consolidation, especially when it comes to credit card debt. The average Ohio household has 3 credit cards and carries credit card debt equal to 17% of their annual income, and 59% have credit card debt of over $20,000.
Many pay the minimum amount due, paying ruinous interest rates that is a continuous drain on their pockets. Debt consolidation may be done in one of two ways: taking out a loan at a lower interest rate to cover all credit card debt or transferring balances of all credit cards to one card with the lowest interest rate and paying more than the minimum.
The rationale behind debt consolidation is minimizing interest payments. The best type of loan would be a secured loan, such as a second mortgage on the home, because secured loans typically carry lower interest rates. The next best option is a personal or character loan, an unsecured loan that usually has an interest rate between 18% and 24%. In comparison, credit cards average 36%.
If the credit score is not good enough for any type of loan, then transferring the balance to a single card is the only other option. Some credit cards cater to Ohio debt relief efforts by offering special low interest rates for balance transfers from other cards.