Arizona Debt Relief
16 MIN READ
Published April 05, 2023 | Updated May 30, 2023
Written by Christie Hudon
Edited by Wes Silver
In a Nutshell
Several key factors contributed to many Arizona residents sinking further into debt in recent years. To name a few, the pandemic slowed down the state’s economy, while the housing market recorded a decline in sales, and unemployment rates increased. This increased Arizona's average credit card debt to $5,409, trapping more AZ residents in a never-ending debt cycle. Luckily, you can break this cycle by enrolling in an Arizona debt relief program.
Read on to learn more about debt relief programs, the types of debts that most Arizona residents face, and financial hardship resources for Arizonians.
Arizona's Economic Picture
Arizona attracts many people because of its tax-friendly policies, universities for higher education, and tourists visiting the Grand Canyon. Such a high influx of inbound migration into the state led to a housing shortage as the median property cost rose to $409,038, while mortgages had a monthly median price of $1,545.
With the housing market soaring higher, consumer spending also increased. This left many Arizonans in need of debt relief options.
How Does Debt Relief Work in Arizona
Debt relief uses a variety of options to help you manage your outstanding balances. One option, debt settlement, is the process of debt negotiation where your debt is reduced or forgiven.
The debts covered in debt relief include unsecured debt, federal student loans, mortgage payments, auto loans, and personal loans. Finding the right option for debt relief is important to avoid collection agencies and fees when you're struggling to repay what you owe.
Debt and Finance Statistics
The following debt and finance statistics are specific to the state of Arizona:
Average Consumer Debt
The average consumer debt in Arizona is $109,301. One factor leading to an increase in consumer debt is a rise in the nation’s delinquency rate to 1.88% for credit card balances.
Credit Card Debt
Credit card debt is one of the leading types of debt that most Americans struggle to pay. The nation’s average credit card debt was $5,589 in 2022, totaling over $800 billion.
This doesn’t fall far from Arizona’s average credit card debt of $5,409, leaving many residents of the Grand Canyon State struggling or behind on payments. In the long run, this debt increases due to the compounding effect, requiring residents of Arizona to seek debt relief.
Auto Loan Debt
Loan rates for automobiles have increased across the nation, reaching a record high of over $20,000 per driver in 2021. These costs are carried by drivers in Arizona, where the average auto loan debt was $23,245 in 2021.
Mortgage Debt
Arizona's homeownership rate is 65%, with median home values over $400,000. However, the median home value varies across the state, with metropolitan areas like Phoenix, Tucson, and Scottsdale recording values of $398,908, $313,010, and $753,075, respectively. This is because of the growing demand for houses, thanks to the high number of Americans migrating into the state.
On the other hand, the median gross rent for Arizonians is up to $1,172. Thankfully, the state upped their homestead exemption from $150,000 to $250,000 in 2019, cushioning residents from the effects of filing for bankruptcy.
Student Loan Debt
About 32.4% of Arizonans have managed to complete their bachelor’s degree or higher; just shy of the nation’s rate of 35%. Many of these learners use student loans to pursue their studies, contributing to the state's increase in student loan debt.
Arizona's average student loan debt is $35,583, ranking 24th amongst the leading states with high loan totals. The national average for federal student debt per borrower is nearly the same at $35,287.
Household Debt
Household debt in America increased by 2.4% to $16.9 trillion, largely due to the effects the pandemic had on consumers.
The impact of the pandemic was not any different in Arizona, where the average household debt was $54,290 against the country’s average of $51,580.
Consumer spending contributed to the rise of household debt, as Arizonans spent more than they earned. This made Arizona voters pass a new limit on consumer debt collection aimed at limiting how credit card companies charge interest.
Bankruptcy
The number of bankruptcy cases being filed in Arizona has been on a downward trend since 2010. In 2022, the total number of filed bankruptcy cases was 8,961. A total of 7,302 residents filed for Chapter 7 bankruptcy, with 1,556 filing for Chapter 13, the most common proceedings for individuals.
Average Income and Employment
The average household income in Arizona is $89,693, while the per capita income is $34,644. The median income in the U.S. is $70,784, making Arizona a high-income area, with Paradise Valley, Carefree, and Scottsdale owning some of the most affluent mean incomes.
Although Arizona has a higher average income than the U.S. in general, its poverty level is above the national average at 12.9%. It also has a 3.5% unemployment rate, the same as the nation.
Credit Scores
The national average credit score increased to 714 in 2021 and remained unchanged in 2022. This is due to the historically low delinquency rate on personal finance as consumers found alternative ways of making monthly payments, even through the pandemic. This includes using debt relief programs to manage debt and avoid delinquency.
The average credit score of Arizonans also rose to 712 in 2022. A good credit score like 712 can make it easier to get low-interest loans for debt consolidation.
Identity Theft
According to the Insurance Information Institute, the state of Arizona ranked 17th nationally with the number of identity theft cases reported in 2022. The total number of identity theft cases reported was 19,018, with credit card fraud as the most common type of fraud.
Banking and Tax Info
Arizona has a state-local tax burden of 9.5% for the fiscal year of 2022. As of 1st January 2023, the following tax rates will take effect in the state of Arizona:
- Corporate income tax rate of 4.9%, making Arizona the 37th highest state in the corporate income tax rate
- A flat individual income tax rate of 2.5% with brackets
- A state sales tax rate of 5.6% and an average local sales tax rate of 2.8%, bringing the combined state and average local sales tax rate to 8.4%
The state also has a special tax rate of 19 cents per gallon of gasoline and $2 for every 20-pack of cigarettes.
Since unemployment rates in the 3rd quarter of 2022 were relatively low at 3.5%, the banking sector in the state is expected to grow. The largest banking market is Phoenix, with 61 banking institutions and deposits of above $181,000 million.
TurboDebt Statistics in Arizona
At TurboDebt, we strive to help Arizona residents achieve a debt-free life. Since we started offering debt relief services in Arizona, we’ve helped thousands of customers. In 2022, we had 2,428 clients, with 786 enrolled in our debt relief program. The average enrolled debt was $21,141, with a total enrollment exceeding $16 million.
Our experienced team managed to save our clients 52.69% of their total enrolled debt before fees. This brings the total saved debt to $8,755,291 (before fees).
Top Types of Debt to Get Relief from in Arizona
TurboDebt's debt relief program works by providing debt relief for the following types of debts to the residents of Arizona:
Credit Card Debt
The average credit card debt in Arizona is above $5,000, and that amount can grow depending on interest rates. Getting out of credit card debt isn’t easy if you only make the required minimum monthly payments since they only cover the interest fees and don’t reduce much of the principal amount owed.
To avoid this cycle of debt, TurboDebt debt counselors will advise you on the best debt relief options. They can negotiate with your lenders to reduce your total credit card debt to get you back on your way to a positive credit score.
Divorce Debt
Arizona is a community property state, meaning that debts and assets accumulated during marriage are divided equally between spouses. What’s more, the divorce process is quite expensive, with average fees topping $10,000 in the Grand Canyon State. You might end up with a debt that you can’t account for after divorce.
Whether you work with nonprofit credit counselors or our TurboDebt experts, it’s possible to create a debt relief plan to settle your divorce debt at reduced interest fees, saving more of your hard-earned money.
Business Debt
The tax environment and cost of starting an LLC make it a business-friendly state for startups and other businesses. This has resulted in the migration of businesses from other states where the tax and commercial footprint is high compared to Arizona’s. As new businesses enter Arizona, owners carry their accumulated business debt with them.
TurboDebt can help you settle and clear your business debt without filing for bankruptcy. We do this by negotiating with your lenders through our debt management programs.
Medical Debt
Arizonans carry a median medical debt of $1,903. Unpredictable medical costs can make healthcare expenses spiral out of control, quickly exceeding your income.
If you find yourself in medical debt, TurboDebt can advise you on an effective debt relief plan to fit your financial needs. We’ll provide the best relief options to eliminate medical debt.
Homeowner Debt
Since the average home value in Arizona is over $400,000, it's a costly place to own a home. The situation is made dire by Arizona’s per capita income of $34,644. Consequently, most consumers end up raking in a lot of homeowner debt paying for high mortgages.
TurboDebt can make your repayment plan easier through a debt management program, which can go a long way in helping you avoid foreclosure and achieve a debt-free life.
Retirement Debt
Since the state has unfunded pension liabilities of over $15.9 billion, retirement life is often characterized by debt, especially in areas with a low retirement income. Unexpected expenses can disrupt Arizona residents living on fixed incomes.
Let TurboDebt help you make a plan to eliminate your retirement debt. Get started with a free consultation today.
Options for Debt Relief Arizona
There are six top debt relief options for the state of Arizona residents. They include:
Debt Management Programs
The nation’s average credit card interest rate topped 20% in April 2023, but these rates can climb even higher if you miss the first payment. With such high penalties and interest rates, getting out of credit card debt or other outstanding payments can be difficult for many Arizonians.
Debt management programs help you settle debts in various ways, often by negotiating for reduced interest rates, cancellation of late repayment fees, or a fixed payment plan. Debt management programs help you make a plan to pay off your debt, usually without using lenders or permanently damaging your credit score.
Debt Consolidation Loans
Debt consolidation loans are a type of debt relief option that involves paying off all your existing debts at once through a loan. They work by accessing new loans to make lump sum payments for your existing debts, leaving you with one loan to manage. With an average FICO score of 712, Arizonans can access lower-interest-rate debt consolidation loans as a debt relief option.
If you have a low FICO score, credit counselors may advise you against debt consolidation loans. This is because the new interest rates might be higher than your existing rates making debt consolidation loans expensive.
Debt consolidation loans are preferred for their convenience of having a fixed repayment plan with fixed interest rates, a single monthly deposit towards debt payment, and low monthly payments.
Debt Settlement
If you’re falling behind on your debt repayment plan or struggling to reach your minimum monthly payment, debt settlement plans may be your best option for debt relief. They work by negotiating for a partial payment of the amount borrowers owe and forgive the rest.
Debt settlement plans typically require you to pay your debt settlement company a service fee ranging from 15-25% of your total debt. For instance, if you owe $15,000, you might be charged a service fee of $2,250 to $3,750.
During the process, a debt settlement company may also ask you to stop making payments to creditors during the negotiation period. You’ll also make monthly deposits into a savings account during this phase, which debt settlement companies use to settle the debt and deduct their service fees.
Credit Counseling
Credit counseling agencies offer certified credit counselors to advise you on debt management, consumer credit, budgeting, and fiscal responsibility. Their work is to help you avoid bankruptcy by negotiating for lower interest rates, waiver on late fees, and helping you to choose a debt repayment plan.
Whether you choose a nonprofit or private credit counseling organization, you'll often create a debt management plan to determine the most effective way to pay off your debts, plus a budget using your debt-to-income ratio to figure out monthly payments to creditors.
Bankruptcy
Although the bankruptcy level in Arizona has been declining, some debtors still prefer it as a debt relief option. The common types of bankruptcy in Arizona are Chapter 7 and 13, which involve the following:
Many debtors avoid filing for bankruptcy because it negatively impacts their credit reports and credit history for up to 10 years. For legal advice or more information about bankruptcy, consider contacting a law firm.
Debt Forgiveness
Debt forgiveness happens when creditors waive some or all of your debt. Debt forgiveness works on debts such as student loan debt, medical debt, tax debt, mortgage debt, and credit card debt.
Many debt forgiveness programs are offered by the government, with stringent requirements for anyone hoping to eliminate their debts. However, it's important to note that debtors have to file the amount of debt forgiven as income tax with the IRS.
Debt and Financial Hardship Resources
If you’re in financial hardship or are struggling to meet your basic needs due to debt, the following debt and hardship resources may help:
Temporary Assistance Programs
The Arizona Temporary Cash Assistance Program offers monetary assistance for low-income families. The main objective of the program is to enable families in need to become self-sufficient through the following;
- Providing grants to needy families to care for their kids in their homes
- Championing for two-parent families
- Preventing out-of-wedlock pregnancy cases
- Conducting work, marriage, and job preparations for needy parents.
State Health and Human Services
The following health and human services programs are curated for individuals and families:
Child Care
The following childcare activities are designed to help Arizona residents with children:
- The Arizona Adolescent Pregnancy Prevention program educates young girls on avoiding pregnancies.
- Arizona Runaway and Homeless Youth program has been developed to help youths experiencing homelessness and who are running away from home to find housing solutions.
- The new Childcare Infrastructure Grant, set to take effect on the 30th of September 2023, will provide a foundation for child care, education, development, and protection.
Shelters for the Homeless
The Arizona Department for Economic Security has partnered with non-profit organizations and local governments to offer rapid rehousing, emergency shelter, street outreach, and homeless prevention.
To gain any of these services, dial *211 or visit their website.
Free Transportation Services
You can access free transportation services by dialing the 2-1-1 transportation hotline. The program offers a daily free ride schedule from 8 am to 5 pm.
Finding Debt Relief in Arizona
Debt relief programs are crucial to mitigating and eradicating escalating debts in Arizona, and thankfully there are a variety of effective options available for residents.
When looking for debt relief options, it's important to conduct thorough research on the debt relief company in question to avoid being scammed. Carefully read reviews and research the services and resources that offer on their website.
Check out TurboDebt's thousands of positive reviews from our clients. To date, we've helped over 100,000 clients save up to 54% of their total debt (before fees).
Take the next step towards becoming debt-free and building wealth again. Get started with a free debt relief consultation from the team at TurboDebt.