Alaska Debt Relief

In a Nutshell

Alaskans struggle with debt more than the average American. Whether that debt comes from unpaid credit card bills, payday loans, or your mortgage, several debt solutions are available to residents of America’s northernmost state. Keep reading to learn more about the most common types of debt in Alaska, your options for debt relief, and how TurboDebt can help.

An Economic Picture of Alaska

The name Alaska is derived from the Aleut word "Alyeska," meaning "great land." Alaska is the largest state in America at about 2.5 times the size of Texas. It is also home to some of the largest tracks of unspoiled wilderness in the country. It’s no surprise that over 1.1 million visitors make their way north to experience the state’s natural beauty each year, and Alaska’s tourism industry is the state’s second-largest employer after the oil and gas industry. 

Half of America’s coal reserves are located in Alaska, along with the nation’s largest silver and zinc mines. Logging, fishing, and farming also make up large portions of the Alaskan economy.  

However, there are downsides to living in America’s “Last Frontier.” Because most consumer goods have to be transported from the continental U.S., everyday products in Alaska are more expensive than almost anywhere else in the country.

The average cost of living in Alaska is the sixth-highest anywhere in the United States. The average Alaskan spends about $54,331 yearly on housing, utilities, healthcare, food, and other personal expenditures. In comparison, the national average for an individual is $38,266 per year.

With the high cost of living in Alaska, it is no wonder that Alaskans find themselves in debt. Even if it starts off small, debt can quickly spiral out of control and take over your finances.

How Does Alaska Debt Relief Work?

If you've found yourself in debt, you still have several options at your disposal to help you regain control over your life and finances. Debt relief is the process of helping an individual or entity pay off the money they owe to lenders or creditors in a manageable way. As a resident of the state of Alaska, it is important to research the available debt relief options and find the best one for you and your situation.

Trying to get relief from debt on your own is not impossible, but it can be quite difficult if you are not a trained professional. That’s why many people choose to work with a debt relief company or debt settlement company that's either a private or nonprofit organization. A debt relief company will negotiate with the lender on your behalf to reduce or settle the debts you owe.

Alaska Consumer Debt Statistics

Alaska has the 2nd highest level of debt in the country, with an average debt-to-income ratio of 1.72. This means that for $1 in annual salary an Alaskan resident earns, they owe $1.72 to a lender.

Average Consumer Debt

Consumer debt refers to the sum total of debts incurred by purchasing goods and services for individual or household consumption. This can include purchases from credit cards or loans to finance a home or car. In 2022, Alaska’s average consumer debt balance was $113,702.

Credit Card Debt

Unfortunately, Alaskans have the highest level of credit card debt in the country, with an average balance of $7,338. This is almost $1,500 higher than the national average credit card balance, which is $5,910.

Auto Loan Debt

In 2021, the average Alaskan owed $24,325 in auto loans. Again, this is higher than the national average, which was $20,987 in 2021.

Mortgage Debt and Housing Market Statistics

Like many other areas of the country, housing costs are on the rise. As of May 2023, the average sale price for homes in Alaska was $350,163, up 2% from the previous year.

The average mortgage balance in Alaska was $248,801 in 2022, a 5% increase over 2021. 

As of the 4th quarter of 2023, Alaskans could expect to pay about 8.00% APR on a 30-year fixed-rate mortgage and about 6.80% APR for a 15-year fixed-rate mortgage, making the monthly payment on a new 30-year mortgage for an average mortgage balance of $248,801, around $1,826 per month.

Student Loan Debt

According to a report from Education Data, 67,600 residents of Alaska have outstanding student loan debt with an average balance of $34,024. However, this only counts loans from the federal government and does not include private loans.

Bankruptcy

Bankruptcy is a legal proceeding for businesses or individuals facing outstanding debts. There are several types (called “Chapters”) of bankruptcy, but the two most common are Chapter 7 and Chapter 13 bankruptcy.

In 2022, 176 parties filed for bankruptcy in Alaska. Of these, 137 filed for Chapter 7 bankruptcy, while 39 filed for Chapter 13. Thankfully, this is a dramatic decrease from the previous decade when bankruptcy filings were at all-time highs.

Average Income and Employment

In May of 2023, the Bureau of Labor Statistics reported an unemployment rate of 2.7% in Alaska, well below the national average of 3.7%.

According to the Census, the median household income in Alaska from 2017-2021 was $80,287. The average per capita income for the same period was $39,236.

Credit Scores

If you apply for new lines of credit in the future, the lender will want to look at your credit score to predict how likely you are to pay back your loan on time. Your credit score is calculated based on your past credit history, including how often you pay your bills on time, your current unpaid debt, your current lines of credit (including the percentage of available credit that you’re currently using), and your history of bankruptcy or foreclosure.

Most credit scores range from 300-850, with anything above 670 considered “good.” The higher your credit score is, the more likely you are to be approved for new credit accounts or receive more favorable loan terms.

The average credit score for Alaskans is 723, one of the highest among the 50 states. If you want to know your credit score, you can receive a free credit report once a year from each of the three major credit reporting bureaus: Equifax, TransUnion, and Experian.

Identity Theft

Identity theft happens when a thief uses your name and other personal information to open new lines of credit or commit other fraud. When it comes time to collect a payment, the lenders will go after you instead of the person who actually used the money.

Fortunately, Alaska ranks 43rd in the nation for reports of identity theft. In 2022, there were only 767 complaints reported, which works out to 104 reports for every 100,000 residents.

Banking and Tax Info

Alaska is home to 5 banking institutions with over $9 billion in assets.

Alaska has one of the lowest tax burdens in the country, as the state does not charge an individual income tax or a state sales tax. The average local sales tax rate is only 1.76%.

How TurboDebt Helped Alaska Residents Get Relief Last Year

In 2022, TurboDebt enrolled a total of 77 clients from Alaska who needed help finding relief from debt. On average, our clients in Alaska enrolled $26,249 into our program. After working with us, residents achieved an incredible average savings of 54.7% of their total debt before fees.

Top Types of Debt Alaskans Need Relief From

Based on our debt relief program enrollments in Alaska, we see a majority of individuals who need relief from the following top types of debt:

Credit Card Debt

Credit cards make it easy to pay for common consumer goods and services like clothes, groceries, entertainment, and other household items without depleting your savings. Many companies offer rewards credit cards that give you membership points or cash back for charging a certain amount each month, even at other stores.

Each month, your statement will show how much you owe in total and the minimum payment you need to make. If you fail to make your minimum payment, you're considered delinquent and may be charged late fees.  If you are late by more than 30 days on your payment, this fact will be reported to your credit report as a 30-day (or 60-day or 90-day) late payment.

The later the payment (30, 60, or 90 days), the worse impact it will have on your credit reports and credit scores. One 30-day late payment can drop your credit score by as much as 100-150 points, so it is best to avoid this by making payments as promptly as possible, even if you miss your monthly payment’s due date.

Alaska has the 23rd highest credit card delinquency rate in the country at 7.53%. Paying the minimum balance is an easy way to avoid delinquency, but any money you did not pay off will start to accrue interest. If you only make your monthly minimum payment while continuing to spend, your credit card debt will start piling up quickly.

This is the number one type of unsecured debt that Alaska residents enroll in our program, so if you need help with credit card debt relief, don’t hesitate to reach out to our experts at TurboDebt.

Divorce Debt

According to the CDC, Alaska had an average divorce rate of 3.1% in 2021. While it only costs $200 to file for divorce in the state of Alaska, if the divorce is contested and you require legal advice or counsel, you could pay $15,000-$20,000 or more in attorney fees.

Divorce disrupts your financial situation as you restructure money after a split. Debts accrued during the marriage are often split equally between both partners after the divorce, so you'll still be responsible for paying those off.

If both you and your spouse worked, you now need to adjust to living on a single income instead of two. It's also easy for someone who was recently divorced to go into debt because they no longer have sufficient funds to cover their previous spending habits.

If you need help navigating divorce debt, we’ve assisted many residents in this area. Feel free to get in touch for a free consultation.

Medical Debt

Health insurance and government programs help ensure that all Americans have access to essential health care. However, there are many people in this country who are still uninsured or underinsured, meaning they have to deplete their own savings and use credit to pay for medical care.

Almost 13% of Alaska residents under the age of 65 currently live without health insurance. Even for those with insurance, their plan may not cover all of their expenses. With hospital stays and surgeries costing up to tens of thousands of dollars, many people take out loans or use credit to cover unexpected medical expenses.

Around 4% of the population of Alaska owes medical debt. The state’s average amount of medical debt in collections is $456.

Since medical debt is another top type of debt that we tend to enroll in our program, we’re well versed on the best solutions. With TurboDebt's customized debt relief solutions, you can get relief from medical debt and be on your way to building wealth once again.

Homeowner Debt

Mortgages are the single largest source of debt for Americans in every state, including Alaska. However, the cost of maintaining a home generates additional expenses. Your yard, lawn, plumbing, and electrical system all need regular maintenance to prevent serious deterioration, and even if you're diligent about upkeep, accidents can still happen.

If Alaska is known for one thing, it’s the frigid cold and snowy weather. This can lead to burst pipes, leaking or collapsed roofs, fallen branches, and more. If you're faced with an unexpected, costly repair, you may have no choice but to take out a loan to cover the expense.

Don’t let mortgage debt or other homeowner expenses stop you from achieving financial freedom. See how TurboDebt can help you tackle these debts to achieve a debt-free life.

Business Debt

Business owners often go into debt to cover the start-up costs of a company by taking out a loan. Some business owners end up dipping into their personal savings account or credit to try and save a failing business.

If you’re a business owner who might be struggling to find relief, know that there are options out there. If you want to learn more about what might suit your unique situation, don’t hesitate to set up a free consultation.

Retirement Debt

In Alaska, the average retirement age is 61, and the average life expectancy is 79. It is also the 4th most expensive state to retire in. To live comfortably in retirement in Alaska, you'll spend an estimated $79,245 each year.

If you live to age 80, you would need $1,505,740 in retirement savings. This also assumes that you don’t have any unpaid debts, which you'll still need to pay, even when you retire and live on a fixed income. Contact TurboDebt today to learn how our strategic planning can help you manage and pay off debt.

Options for Debt Relief in Alaska

If you're struggling with debt in Alaska, consider trying one of the following strategies for debt relief:

Credit Counseling

Credit counseling services are also offered through credit counseling agencies. Most, but not all, of these agencies are nonprofit organizations. This means that you can access their services at little to no cost. When you choose to enroll in counseling, you're paired with a credit counselor for one-on-one support. Your credit counselor reviews your financial situation and helps you create a budget to manage your repayment.

Debt Management Programs

Debt management programs help make repayment easier if you owe debts to multiple lenders. Staying on top of how much you owe and when those payments are due each month can be overwhelming and cause you to fall behind on payments. To make things easier, you can enroll in a debt management plan with a credit counseling agency.

Instead of making separate monthly payments to each creditor, you will make a single monthly payment to the agency. You will still owe the same principal amount of debt, but you may be eligible for lower interest rates or fee waivers. Enrollment in a debt management program helps you organize your monthly payments and can decrease the overall long-term cost of paying off your debt.

Debt Consolidation Loans

Like debt management programs, debt consolidation loans don’t reduce the amount of debt you owe, but they do streamline the repayment process. Instead of going through a credit counseling agency, you'll go through another lender to take out a loan equal to your total amount of outstanding debts. You'll then use the proceeds from this loan to pay off what you already owe to creditors, then make only one payment toward the new, larger loan each month.

Instead of making multiple monthly payments to several lenders, you're now responsible for a single monthly payment to a single lender. If most of your debt comes from credit cards, you may be able to consolidate payments with a balance transfer card.

Keep in mind that not everyone is eligible for this type of debt relief. Just like any other line of credit, you need to apply for a debt consolidation loan, and you may be denied if you don’t meet the lender’s eligibility requirements. Since outstanding debt can impact your credit score, it may be more difficult to meet these requirements. However, it's not impossible, and many people are able to find debt relief through debt consolidation loans.

Debt Settlement

Debt settlement companies negotiate with creditors on your behalf to reduce the total amount you owe. When you settle a debt, you and your lender agree on a lower lump sum payment you can make to have your debt forgiven. You will still have to pay off the agreed settlement price, but you could save approximately 50% of the total amount you owe.

Once you enroll in a debt settlement program, you'll pay into a savings account set up by the settlement organization. This goes toward paying off your creditors and helps keep your monthly payments affordable. You'll also owe fees to the debt settlement company for negotiating on your behalf and managing your payments.

Bankruptcy

If you find that you can't pay your outstanding debts and other debt solutions have not worked or aren’t available to you, you can file for bankruptcy. When you file for bankruptcy, your debts are forgiven, and your lender also gets some form of repayment, either through the sale of your assets or through some form of approved repayment. However, this process impacts your credit for up to 10 years.

While there are many different types of bankruptcy proceedings, people and businesses most commonly file for Chapter 7 or Chapter 13 bankruptcy.

When you file for Chapter 7 bankruptcy, you sell off your non-exempt assets to pay off as much of your debt as possible. Any debt left over is forgiven. This is usually used to erase unsecured debts like medical bills or unpaid credit card balances.

For those who make too much money to file for Chapter 7, Chapter 13 bankruptcy can be an effective option. When you file for this type of bankruptcy, you get to keep your property and pay off your debt in installments over the course of three to five years.

Debt Forgiveness

Debt forgiveness programs are uncommon and mostly offered by the federal government. Some lenders or creditors may offer debt forgiveness programs to individuals experiencing financial hardships who’ve worked in a qualifying employment position for a certain period of time. If you can obtain debt forgiveness, part or all of your debt will be erased, and you'll no longer be responsible for paying that money back.

Debt and Financial Hardship Resources for Alaskans

Trying to stay on top of your debt is hard enough, but it can be especially difficult if you're struggling to pay your regular bills as well. In addition to seeking debt relief, here are some assistance programs you can take advantage of in Alaska to help ease your overall financial burden.

Alaska’s Permanent Fund

Brad Reichert, Founder and Managing Director of Reichert Asset Management LLC, shares an important way Alaska residents can earn additional funds:

“One of the benefits of living in Alaska that helps defray some of the extra costs of living is the annual dividend disbursement from Alaska’s Permanent Fund, which is given to nearly every Alaskan citizen each year from the Alaska Department of Revenue, as their annual share of the state’s nest-egg oil fund,” Reichert explains.

“The annual payment, which has been paid out for the last 42 years, allows Alaskans to share in a portion of the State minerals revenue in the form of a dividend to benefit current and future generations,” Reichert adds. 

Temporary Assistance Programs

The Alaska Temporary Assistance Program (ATAP) provides low-income families with children cash assistance. The program, which is funded by the federal Temporary Assistance for Needy Families (TANF) block grant, is focused on helping caretakers gain self-sufficiency through employment.

Alaska Health and Human Services

In July 2022, Alaska’s Department of Health and Social Services (DHSS) was reorganized into two separate departments: The Department of Health (DOH) and the Department of Family and Community Services (DFCS). The Division of Public Assistance within DOH administers SNAP benefits and the Family Nutrition Program, heating assistance, senior benefits, disability benefits, and healthcare assistance.

Child Care

The Division of Public Assistance within the DOH also administers the Child Care Assistance program, which covers childcare expenses for low-income families who are working or enrolled in an education or training program. It's also known as the Parents Achieving Self Sufficiency (PASS) program. The Alaska Inclusive Child Care Program also provides supplemental subsidies for children with special needs.

Shelters for the Homeless

There are several emergency shelters and transitional housing programs available for Alaskans, especially in the areas in and around Anchorage, Fairbanks, Juneau, Kenai-Soldotna, and Mat-Su Valley. Some of these organizations serve specific clients, such as single individuals, abused women and children, runaway teens, or families.

Free Transportation Services

If you're on Medicaid in the state of Alaska, you may be eligible to receive free transport to medical appointments. Individual municipalities may also offer services. Anchorage, for example, offers complimentary transportation services for people with disabilities, senior citizens, and those receiving Medicaid through the AnchorRIDES program.

Take Advantage of a Free Debt Relief Consultation with TurboDebt

It is possible to achieve a life without debt in Alaska. Working with a reliable and credible debt relief company like TurboDebt is an effective solution to achieving financial freedom. Start by answering a few short questions and start your journey to debt-free living today.