Alabama Debt Relief

In a Nutshell

Alabama, a state in the southeastern region of the United States, is home to a population of over 5 million people. However, certain challenges come with living in this state. For example, according to the U.S. Census Bureau, 16.1% of Alabama residents struggle with poverty. In addition to this higher-than-average statistic, Alabama also ranks near the bottom regarding median household income at $54,900.  

TurboDebt debt relief services are a great way to get out of debt and start afresh. With the help of a debt relief company like TurboDebt, you can save yourself thousands of dollars in interest payments and late fees and start to rebuild your wealth.

Alabama Debt Landscape

Alabama is one of the few states in the country that doesn't have any kind of law that caps interest rates. This means creditors can charge whatever rate they want, and it's up to you to understand how much you're paying for your credit card or personal loan. As a result, some Alabama residents find themselves in huge debts resulting from the high-interest rates.

Luckily, there are several accessible options when it comes to debt relief in Alabama. If you find yourself struggling with debt and want to know more about your options for relief, TurboDebt has you covered!

How Do Debt Relief Programs Work In Alabama?

Many people have used debt relief programs to overcome their debts over the years, but it’s only recently that the concept has become more popular. If you are looking for a way to get out of debt, an Alabama debt relief program may offer an effective solution.

Before you commit to a program, it's a good idea to do your due diligence to find a reputable organization. You can check with the Better Business Bureau, a non-profit organization that provides information used to grade businesses, including debt relief firms, and resolve customer complaints. You can also check the company's reviews and accreditation information.

Alabama Debt and Finance Statistics

Average Consumer Debt

The state of Alabama considers the average amount of debt for auto loans, personal loans, student loans, mortgages, and credit cards when calculating and comparing the level of consumer debt carried by its residents. According to a report by the Federal Reserve, the average consumer debt in the State of Alabama is $44,440.

Credit Card Debt

When you’re in a tight financial situation, you might decide to put every purchase on your credit card until it reaches its limit. This leads to over-accumulating this unsecured, high-interest debt and the possible late or repayment fees that come with it if you don’t stick to the payment plan.

Many Alabama residents are in a similar situation, carrying an average credit card debt of $2,690 per household.

Auto Loan Debt

The average auto loan debt carried by drivers in Alabama is $5,900, slightly above the national average of $5,470. The high amount of auto loan debt increased significantly during the COVID-19 pandemic, as the lockdown made it hard to import cars while the demand for cars rose. This led to increasing vehicle prices, which are still prevalent today, especially for certain high-demand models.

Mortgage Debt

Compared to other states, Alabama is home to some of the most affordable cities in the U.S. While cities like Birmingham, Montgomery, and Huntsville are large metro cities, they still remain affordable to most Alabamians. Property owners typically find it affordable to purchase new homes in Alabama, where the median mortgage payment is $1,242 per month.

However, Birmingham residents have seen monthly mortgage payments increase by 65% due to the recent interest hikes by the Federal Reserve Bank, with the average interest rate nearly doubling for mortgages across the country.  The cost to rent an apartment has also increased to $852 per month from 2017 to 2021.

Some homeowners have chosen to seek help from the experts at TurboDebt about getting into a debt relief program to eliminate outstanding debts.

Student Loan Debt

Home to excellent schools like The University of Alabama and Auburn University, the average student debt in Alabama is $5,480. While this is no small amount of education loans to carry, some graduates in Alabama may find they qualify for student loan forgiveness under federal programs based on job or income status.

Bankruptcy

In 2021, the state of Alabama recorded the highest rate of people filing for bankruptcy in the U.S. In fact, 296 residents per 100,000 filed for either Chapter 7 or 13 bankruptcies across the state.

Some of the available state bankruptcy exemptions in Alabama are family allowance, homestead exemption, personal property wildcard exemption, and pension and retirement benefits, among others.

Average Income and Employment

The average household income in the state of Alabama was up to $56,929 in 2021 against $54,689 in 2020.

The unemployment rate in Alabama sat at 2.3% as of March 2023, well below the national average of 3.6%.

Credit Scores

Alabama residents have some of the lowest credit scores in the U.S. With an average credit score of 686, which lands them on the low end of what’s considered a “good” credit score, some creditors may find this a reason to shy away from offering personal loans and automobile financing to residents of Alabama. 

Higher credit scores help you secure a low interest rate when qualifying for a personal loan. However, by pursuing a debt relief option with TurboDebt, Alabamans can more easily and effectively work towards improving their FICO scores.

Identity Theft

The total number of identity theft cases in Alabama was 17,763 in 2022, making Alabama one of the worst-hit areas for identity theft. Credit card and government benefits-related fraud were the leading types of identity theft, as most criminals stole personal information to claim government-related benefits like stimulus payments and unemployment benefits.

Banking and Tax Info

Alabama’s graduated income tax ranges from 2% to 5%, with some areas collecting a local income tax. Other tax rates include the corporate income tax at 6.5%, state sales tax at 4%, a maximum local sales tax of 7.5%, and a combined average local and state sales tax rate of 9.24%.

How TurboDebt Helped Alabama Residents Get Relief Last Year

In 2022, TurboDebt assisted a total of 2,181 Alabama residents with debt consultations, and 692 of them enrolled in our debt relief program. The average enrolled customer debt was $20,109. On average, we saved clients 48.39% before fees through our debt relief program.

You can take advantage of this by starting with a free debt relief consultation, where we’ll determine what options may be best for your unique financial situation.

Top Types of Debt To Get Relief From in Alabama

Credit Card Debt

While credit card debt is one of the most common types of debt in America, it can also be one of the most difficult for consumers to manage.

If you're struggling with credit card debt and want relief from your creditors, TurboDebt can help. We offer services to help you reduce or eliminate your debt burden, such as debt settlement.

Divorce Debt

In Alabama, the average divorce costs upwards of $10,000 in fees, plus the initial payment for filing. Divorce debt can be overwhelming and difficult to deal with, but TurboDebt is here to help. When you're going through a divorce, it's important to work with a program that understands all of the financial aspects of your case. We've helped clients like you get out from under their divorce debt for years.

Business Debt

Business debt is one of the most common causes of financial hardship. Many businesses get started with little or no capital, and owners rely on credit cards and personal loans to fund their operations. If you're in this situation and facing a lawsuit or other financial crisis, it may feel like there's nowhere to turn. However, there is help available for business owners in Alabama who need assistance with debt relief.

Medical Debt

An estimated 20% of the country carries medical debt, and Alabama residents face the same difficulties. It can be difficult to get ahead when unexpected costs arise due to a medical emergency. Even paying bills that extend beyond insurance coverage can become a struggle.

TurboDebt can help you get relief from your medical debt by negotiating a payment plan with your creditors. As a seasoned debt relief company, we have relationships with lenders and are able to negotiate on your behalf to create reduced minimum payments that work for both parties.

Homeowner Debt

Homeowner debt can also become a source of financial stress for Alabama residents. Facing foreclosure for missed payments or indebtedness due to home repairs makes it difficult to get your finances in order.

TurboDebt is here to help you get control of your homeowner debt and find solutions that work for you. We offer free, no-obligation consultations so that you can learn more about your options and determine which solution is right for you!

Retirement Debt

Retirement debt can be overwhelming, and some retirees reach a point where they feel like they've worked all their lives but have nothing to show for it. While Alabama ranks 4th in Medicare quality nationally, it's not among the list of top states for retirement. Living on a fixed income in the Cotton State may mean you're also living in debt.

Turbodebt can help you get relief from retirement debt so you can focus on building up your nest egg again and enjoying life without the burden of hefty monthly payments.

Options For Debt Relief Programs in Alabama

Debt Management Programs

Although many different types of debt relief programs are available, one of the most effective is a debt management program.

A debt management program helps you get control over your finances by consolidating all your debts into one monthly payment and lowering interest rates on credit cards and other types of debt.

In a debt management program, you'll make a debt relief plan through a professional organization. Both private businesses and non-profit organizations offer help in this way, so it's important to ensure you find a reputable and accredited organization to manage your debt relief process.

Debt Consolidation Loans

Many Alabama residents find themselves struggling with debt problems due to medical bills, credit card bills, student loans, or other types of unsecured debt. Consider a debt consolidation loan if you're struggling with your debts and need help finding a solution.

Alabama debt consolidation allows you to take out a loan (or line of credit) from a bank or credit union that will allow you to consolidate your unsecured debt into one monthly payment. 

This type of loan can help if you have several different creditors trying to collect from you but do not have enough money to pay them all at once. You may also qualify for an interest rate reduction on this type of loan based on your credit score and other factors.

Once you secure the loan, you can pay off your creditors with a lump sum payment to each, leaving you with a single monthly payment, typically at a lower interest rate.

Debt Settlement

Debt settlement programs are designed to help consumers reduce their debts to a more manageable level by negotiating with creditors on their behalf. The goal is to reduce the total amount owed so you can easily make monthly payments. You’ll also typically pay off the debt faster.

In exchange for agreeing to accept less than what is owed, creditors agree to observe the Fair Debt Collection Practices Act to stop all collection attempts and eventually write off the uncollected amount as a loss.

The benefit of a debt settlement company is that it allows you to focus on reducing your debt instead of paying it off completely. When a settlement company completes a debt negotiation on your behalf, they typically reduce the amount you owe by up to 50%. 

Once you and the creditors agree to a payoff amount, you'll set up an account and make monthly payments.  This account is administered for you by the debt settlement company, which will make monthly payments to your creditors on your behalf.  In return, you’ll pay a pre-set fee to the settlement organization for their services.

Credit Counseling

Another effective way to manage your debts is through non-profit credit counseling. This is not a loan and doesn't involve making payments to a company or person. Instead, you work with trained credit counselors who will help you create a plan to pay off your debts. 

Together, you’ll look at your credit report and make a plan to avoid debt collectors in the future. The counselor may also offer financial education courses to help you more effectively manage your finances and cash flow going forward.

Bankruptcy

Bankruptcy allows you to legally settle your debts under a court’s supervision and approval. This often means that all your creditors will receive the same amount of money, and no creditors get more than others. Both individuals and businesses can use the bankruptcy court system.

For Alabama residents, Chapter 7 bankruptcy may alleviate some or all debts, but it comes at a price. After declaring bankruptcy, your credit reports and coordinating FICO scores can suffer for up to 10 years, making it difficult to secure any kind of financing for large or even small purchases.

Check with a law firm or legal professional for legal advice about bankruptcy and to understand all the conditions of filing for bankruptcy as a way to find debt relief.

Debt Forgiveness

Debt forgiveness is not a formal debt relief program in Alabama, but it may be an option in certain circumstances. However, debt forgiveness is not guaranteed, and you may need to pay ordinary income taxes on the full amount of debt for which you receive forgiveness.  

If you have $10,000 of debt forgiven, you'll likely need to include this amount in your taxable income for that year. We recommend consulting a qualified tax advisor, CPA, or Enrolled Agent for details on your particular situation.

Government organizations at the national and state levels are more likely to offer debt forgiveness programs based on qualifications like income level or profession.

Brad Reichert, Founder and Managing Director of Reichert Asset Management LLC, points out that Alabamians may be eligible for student loan debt relief starting in October of 2023 under new changes to the Federally-sponsored Income-Driven Student Loan Repayment plan. Reichert says, “Many may qualify for special Public Service Student Loan Forgiveness programs offered especially to Alabama residents who work in certain qualifying roles within the state.”

State of Alabama Debt and Financial Hardship Resources

Financial hardship can happen to anyone. If you are struggling with a financial crisis, here are some resources in Alabama to help you get back on your feet:

Temporary Assistance Programs

The Alabama Food Assistance Program, or SNAP (Supplemental Nutrition Assistance Program) is a federal program that provides monthly food benefits to low-income families and individuals who work less than 20 hours per week.

The Alabama Medicaid Agency (AMED) offers health insurance coverage for people with low incomes and limited resources.

State Health and Human Services

Alabama residents who need help paying their bills may be able to receive grants from the state or federal government. Some of the organizations that may be able to help include:

• United Way of Central Alabama: The United Way of Central Alabama provides a variety of assistance programs to residents in central Alabama, including financial coaching, emergency assistance with utility bills and rent, and tax preparation services.
• Salvation Army: The Salvation Army operates several programs and services in Alabama to help those in need, including financial assistance, food pantries, and emergency housing.

Child Care

Alabama Child Care Assistance Program (CCAP): The Alabama Department of Human Resources administers the Child Care Assistance Program (CCAP). The program provides child care for eligible families who need work or school assistance. To receive CCAP benefits, you must meet certain income requirements and be enrolled in an approved childcare program.

Shelters for the Homeless

If you are behind on your bills or facing eviction, contact the Alabama Department of Human Resources (DHR). They can provide emergency financial assistance to help pay rent and utility bills. If they do not have enough funding to help you, they may refer you to other organizations that can provide more assistance.

Free Transportation Services

Transportation agencies in the state of Alabama provide many services to help people who live in poverty or are homeless. These services include free bus tickets and transportation vouchers for medical appointments and other essential travel. Most of these programs are funded by the federal government, but some may require you to have an income or receive other services like Medicaid.

Finding Debt Relief in Alabama

Although Alabama has a low cost of living and an average income level, many people in the state struggle with debt. The state also has one of the highest rates of bankruptcy filings in the country.

If you're one of the many Alabama residents struggling with debt, it's time to take action. You need a debt relief program that can help you get back on track financially.

TurboDebt has helped Alabama residents get out of debt for years by creating a customized payment plan to help you achieve your goals. Whether you're looking to get out of a payday loan or have issues with credit card debt, we are here to advise you on what’s best for your personal situation. Call us today or fill out a form online to take advantage of our free consultation and learn more about how we can help you get on the right track to living debt free!