Alaska Debt Relief

In a Nutshell

Alaskans struggle with debt more than the average American. Whether your debt comes from unpaid credit card bills, payday loans, or your mortgage, several debt solutions are available to you in 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

Alaska is the largest American state 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 the northernmost state. Because most consumer goods have to be transported, come from the lower 48, 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 on anywhere in the United States. The average Alaskan spends about $54,331 each year 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 life.

How Does Debt Relief Work in Alaska?

If you have 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.

Debt Relief Companies in Alaska

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. These are usually nonprofit organizations, though not always. A debt relief company will enter into negotiations 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 o 1.38. This means that for $1 in annual salary an Alaskan resident earns, they owe $1.38 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 made with credit cards or loans to finance the purchase of a home or car. Alaska’s average consumer debt balance in 2022 was $113,702.

Credit Card Debt

Unfortunately, Alaska does have the highest level of average credit card debt in the country, with an average balance of $8,026. This is almost $2,000 higher than the national average credit card balance, which is $6,194.

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 February 2023, the median sale price for all types of homes in Alaska was $358,400, up more than 8% from the previous year. The average mortgage balance in Alaska was $248,801 in 2022, a 5% increase over 2021. If you were to buy a home in Alaska today, you could expect to pay 7.05% interest on a 30-year fixed-rate mortgage and 6.42% for a 15-year fixed-rate mortgage. Your average monthly payment would be around $1,201.

Student Loan Debt

According to reports, 67,600 residents of Alaska have outstanding student loan debt. The average balance owed is $34,024. However, this only counts loans from the federal government and does not include state or private loans.

Household Debt

The average per capita debt in Alaska is $63,920. Per capita, debt refers to the amount of debt a single person owes. However, there are often multiple adults living in a household. Assuming two adults live together and share a mortgage and at least one auto loan while also having individual debts from student loans and credit cards, the average household probably owes more than this estimate.

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 bankruptcy 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.

Average Income and Employment

Currently, the Bureau of Labor Statistics reports that the unemployment rate in Alaska is 3.8%, which is just slightly higher than the national unemployment rate of 3.6%. 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 history, including how often you pay your bills on time, your current unpaid debt, your current lines of credit, 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 Alaskan’s credit score is 717. If you do now know your credit score, you may receive a fee credit report once a year from Equifax, TransUnion, or Experian.

Identity Theft

Identity theft is when a thief uses your name and other personal information to open new lines of credit. 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 has the third-lowest rate of reported identity theft in the country. In 2021, there were only 312 complaints reported, which works out to 42 reports for every 100,000 residents.

Banking and Tax Info

Alaska is home to 4 state-chartered banks and three federally-chartered banks, in addition to 13 federal credit unions and one state credit union. Alaska has the lowest tax burden 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 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 were able to achieve 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 in need of 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 also have rewards credit cards that give you membership points or cashback for spending a certain amount of credit each month, even at other stores. Each month, your statement will show how much you owe in total and the minimum payment you must make. If you fail to make your minimum payment, you are considered delinquent and may be charged late fees. 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 into our program, so if you need help with credit card debt relief, don’t hesitate to reach out.

Divorce Debt

Ironically, financial problems and debt are often contributing factors in the dissolution of a marriage, but divorce can also cause an individual to go into debt. According to the CDC, Alaska had an average divorce rate of 3.1% in 2021. It costs $200 to file for divorce in the state of Alaska, and if the divorce is contested and you require legal advice or counsel, you could pay $15,000-$20,000 or more in attorney fees. If both you and your spouse worked, you would have to adjust now to living on a single income instead of a dual income. Or, if your spouse worked and you did not, you will have to find a job. It is easy for someone who was recently divorced to go into debt because they no longer have sufficient funds to cover their previous spending habits. Also, most debts accrued during the marriage will be split equally between both partners after the divorce, so you will still be responsible for paying those off.

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.

Business Debt

Almost every business has debt. Very few people are independently wealthy enough to cover the start-up costs of a business without taking out a loan of some sort. In 2019, 111 small businesses in Alaska received loans from the Small Business Administration totaling $65 million. Businesses can have good debt or bad debt. Essentially, good debt offers a return on investment, while bad debt will grow faster than the company’s profit. When a company takes out a loan to increase production and ends up doubling its profits, that is an example of good debt. If a company were to take out a loan to build a second location that ends up closing in six months, that would be a bad debt. Business owners might 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.

Medical Debt

In theory, health insurance is supposed to ensure that all Americans have access to essential health care. However, there are many people in this country who are uninsured or underinsured, meaning they have to deplete their own savings and credit to pay for basic medical care. As a result, there are a lot of people who avoid routine checkups and minor procedures because they can’t afford to pay for them out of pocket and later must seek treatment for more serious, expensive treatments. 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 into our program, we’re well versed on the best solutions. With a tailored approach, 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 are diligent, accidents can still happen. If Alaska is known for one thing, it’s the cold, snowy weather. This can lead to burst pipes, leaking or collapsed rooves, fallen branches, and more. If you are faced with an unexpected, costly repair, you may have no choice but to take out a loan to cover the cost.

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

Retirement Debt

If you are lucky, you will be able to retire with enough years of health and life left to enjoy yourself. 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 have a comfortable retirement in Alaska, you will spend about $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 when you retire. You are still expected to pay these debts, even when you are no longer receiving a steady income.

Options for Debt Relief in Alaska

If you are struggling with debt in Alaska, you can try one of the effective strategies below for debt relief.

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 to whom and when 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 will go through another lender to take out a loan equal to your total amount of outstanding debt to all creditors. You will then use this credit to pay off what you already owe, then pay off the loan. Instead of making multiple monthly payments to several lenders, you will now be 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 may be 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 requirement. Since outstanding debt can impact your credit score, it may be more difficult to meet these requirements. However, it is not impossible, and many people are able to find debt relief through debt consolidation loans.

Debt Settlement

Debt settlement companies like TurboDebt will negotiate with creditors on your behalf to see if you can settle your debt. 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 part of the money you owe, but not the full amount. For example, you could save approximately 50% on the total amount you owe, and enroll the rest into a manageable payment plan.

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 will be 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.

Bankruptcy

If you cannot pay your outstanding debts, you can file for bankruptcy. You have probably heard of businesses declaring bankruptcy, but individuals can file as well. When you file for bankruptcy, your debts are forgiven, and your lender also gets some form of repayment.

While there are many different types of bankruptcy proceedings, people and businesses most commonly file for Chapter 7 bankruptcy 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 bankruptcy, Chapter 13 bankruptcy is an attractive 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 3 to 5 years.

Debt Forgiveness

True debt forgiveness programs are hard to come by, but some lenders or creditors may offer debt forgiveness programs to individuals experiencing financial hardships. If you are able to obtain debt forgiveness, part or all of your debt will be erased, and you will 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 are struggling to pay your bills as well. In addition to seeking debt relief, here are assistance programs you can take advantage of in Alaska to help ease your overall financial burden.

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.

Childcare

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 is 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, Kenai-Soldotna, and Mat-Su Valley. Some of these organizations serve specific clients, such as singles, abused women and children, runaway teens, or families.

Free Transportation Services

If you are 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 debt-free life in Alaska. Working with a reliable, credible debt relief company like TurboDebt is just one of the many debt solutions you can take advantage of to achieve financial freedom. Start by answering a few short questions and start your road to debt-free living today.

Did you also know there are laws to protect consumers from predatory debt collection agencies? If you are being harassed by debt collectors, seek legal advice in addition to debt solutions.