Chicago Debt Relief
12 MIN READ
Published December 15, 2023 | Updated January 08, 2024
- Housing costs are about $5,000 over the national average in the Chicago area, with rising prices for rent and mortgage loans driving up consumer debt.
- The Windy City continues to see higher unemployment rates than the rest of the country, with Cook County topping out at 4.9% as financial hardship becomes a reality for many.
- TurboDebt helped clients seeking Chicago debt relief by enrolling over $5 million in outstanding debts into our settlement programs.
Why Debt Relief Is Important in Chicago
Today, American consumers face unique monetary challenges and have more need for economic relief in the wake of the COVID-19 pandemic and financial insecurity that followed. Even those earning a secure, substantial income can find coping with rising inflation difficult in the city of Chicago. Working with a professional organization to secure debt relief is an effective way to reorganize your finances and get advice on how to plan for your financial future.
Choosing an effective debt relief program lets you learn from experts about the best ways to overcome your outstanding balances and restore your credit scores. Even before you enroll in a program, you’ll often get personalized advice about the best option for your financial situation. You’ll work with professionals to create a payment plan most suited to your debt amount and type.
Once you decide on the right Chicago debt relief solution, you’ll typically get relief from late fees and may even have a chance to lower your interest rates. Plans like debt settlement can also save you money by reducing your total debt to as low as 50% of your current balance.
If you commit to making consistent monthly payments toward your debt while working with a reputable debt relief organization, you’re more likely to overcome outstanding balances and start living debt-free in as little as 24 months.
Signs You May Need Debt Relief
Whether you’re struggling to make ends meet each month or just can’t put aside any money for savings, you might want to consider debt relief. Here are some indicators that prioritizing debt management is a good idea:
Determining your DTI helps you plan for monthly expenses and avoid outstanding balances on financial obligations like credit card accounts and medical bills. If you carry a high DTI ratio, it’s likely you’re also struggling to pay off debts and could benefit from a Chicago debt relief program.
Resorting to high-interest payday loans for a quick influx of funds puts you at risk of falling into a cycle of debt that’s difficult to escape. If you fail to repay the loan within a short amount of time, you’re stuck with extremely high interest rates and late fees. Thankfully, the state of Illinois enacted a law in 2021 capping interest rates at 36% on consumer loans, including those issued by payday lenders.
The law is an important consumer protection measure for residents of the Windy City because the average annual percentage rate (APR) on a payday loan is just under 400%! However, even a 36% APR can add hefty fees to your payback amount.
Without an increase in income or a plan to cut other expenses, it can be tough to get back on track financially after taking out a payday loan to cover debts. Options like debt settlement or a debt management plan through a professional organization may be the solution you need to pay off outstanding balances and start saving.
Financial experts agree that every household needs a savings fund with enough money to pay for three to six months of expenses in the event of an emergency. Natural disasters, medical emergencies, and automobile accidents are just a few incidents that can affect your ability to earn.
Even worldwide events can impact your cash flow, as many experienced during the COVID-19 pandemic. If you haven’t set aside enough money to pay essential bills until you can recover from a situation, finding professional debt relief help such as credit counseling may be the best way to start restructuring your finances.
Unsecured and Secured Debts
Balances from healthcare bills and credit cards are considered unsecured debt because you don’t have to give the lender any collateral to take out the loan or settle the bill for the medical services you receive. Chicagoans carry a median credit card debt of almost $3,000, with many owing much more as inflation and economic uncertainty force consumers to use credit for more purchases.
Secured debts like mortgages carried by homeowners or vehicle loans for motorists use your home or car as collateral to ensure repayment of the debt. However, if either of these debts goes unpaid due to financial hardship, you risk losing your property (in the case of secured debt) or significantly lowering your credit score (from unsecured debts). In this case, pursuing debt relief may be the best way to secure your property, pay off debt, and improve your credit history.
TurboDebt Helps Chicago Residents Get Out of Debt
In 2022 alone, TurboDebt enrolled over $5 million in outstanding debt from Chicago residents. Our clients carried an average of $21,419 in unsecured debts like credit card balances. If you’re a Windy City resident facing heavy financial burdens, let us help you regain your economic freedom.
We’ve already helped many clients across the great state of Illinois with customized debt relief programs. Contact us today to start your free consultation.
Top Options for Debt Relief in Chicago
Read on to learn more about the most popular choices for individuals seeking Chicago debt relief:
For some residents, debt settlement can be the most effective debt relief in Chicago. At TurboDebt, many of our clients come to us with thousands of dollars in unpaid credit card balances, seeking assistance through our customized debt settlement plans.
The process of debt settlement involves negotiating with creditors to reduce the total amount of debt you owe. You can accomplish this on your own or with the help of a debt settlement organization like our team at TurboDebt. Through settlement with a third party, you can often reduce what you owe by up to 50% of the total before fees.
During the settlement, you’ll pay into a savings account managed by the organization until you reach enough to make a lump sum payment to eliminate your debt. Through this process, many individuals become debt-free in two years or less.
Another option for Chicago residents to manage debts is by working with a credit counseling organization, often through a nonprofit agency. Once you enroll in a program, you’ll get connected with a certified credit counselor who can give you advice about the best way to pay off your debt. Credit counselors can also help you manage expenses by negotiating for lower interest rates and asking creditors to waive late fees.
Certified credit counselors can take a look at your household income to help you determine if you meet federal poverty guidelines or, conversely, if you have the resources to start saving more for retirement.
Credit counseling organizations also provide financial education courses. These classes train consumers in skills like budgeting and avoiding debt. Courses may even involve learning more about your credit report. Some organizations require you to take a certain amount of courses to complete their program.
Debt Management Program
Some credit counseling organizations also offer debt management programs to help Chicagoans prioritize debt repayments. Working with a certified credit counselor, you’ll create a debt management plan that you and your creditors mutually agree to. This typically includes reorganizing debts into a single monthly payment through the organization. The credit counseling agency then pays off your creditors each month on your behalf, using these funds.
Debt management programs may require you to close out some or all of your credit card accounts to avoid any further debt. Once you’ve paid everything off, you’ll need to start over by opening new accounts and building up your credit.
Debt Consolidation Loans
Chicago residents can also pursue relief through a debt consolidation loan. If you carry high balances on multiple accounts, this option may be an effective way to pay off your debts all at once.
A debt consolidation loan works best for those with a “good” credit score because you first have to qualify for a loan that’s large enough to pay off all your other smaller debts, preferably at a lower interest rate. Using the proceeds from this new large loan, you’ll pay down (or pay off) your smaller debts all at once, effectively “refinancing” these unsecured debts.
Once you pay off your existing debts, you’re left with only a single monthly bill toward the new loan. If you can’t secure a loan at a better interest rate, you may end up paying more over the course of the loan repayment than you would have on your multiple accounts. Before choosing this option, it’s important to consider the terms and fees associated with the debt consolidation loan.
Although less common than other debt relief options, debt forgiveness exists for those who meet specific qualifications that are most-often related to an employment position or involvement in a non-profit organization. Mainly offered through the federal government or state-level agencies, debt forgiveness can eliminate most, if not all, of what you owe.
If you work in a position of public service or fall into a low-income tax bracket, you’re more likely to qualify for debt forgiveness. However, it’s important to note that any debt you have forgiven is counted as taxable income on your tax return for that year.
After exhausting all other options for economic relief, Windy City residents can file for bankruptcy to manage debts. Individuals typically file either Chapter 7 or Chapter 13 bankruptcy, depending on how they want to discharge debts.
In Chapter 7 bankruptcy, a judge decides how to sell your assets to pay off creditors. Chapter 13 allows you to reorganize your debts into a 3-5 year repayment plan without selling off assets, but it may cost more in court fees.
Financial Hardship Resources from the City of Chicago
“The city of Chicago is one of a handful of major U.S. cities that has a special debt relief program of its own, specifically for residents of the city,” shares Brad Reichert, founder and managing director of Reichert Asset Management LLC.
“The Administrative Debt Relief Program (or ADR) provides relief for administrative hearings debt, related to fines and other financial penalties and wage garnishments that have been issued by the city for various reasons,” Reichert explains.
According to Reichert, the ADR Hardship Relief Program also offers debt relief for individuals who meet the program’s income qualifications, which is typically less than or equal to 300% of the Federal Poverty Guidelines, or those who are currently enrolled in other public programs like Utility Billing Relief and Clear Path Relief.
How To Get Started With TurboDebt
The first step toward debt-free living in Chicago is to contact our team of experts for your free consultation. You’ll work with one of our consultants to create an affordable plan that fits your financial needs. All you’ll have to do is share a little bit of information to help us customize a program that effectively clears your debt. It’s that simple.
Why Choose TurboDebt?
TurboDebt is more than a debt relief organization. We’re a team committed to helping consumers live their best lives by keeping more of their hard-earned income. We provide resources to help you make smart financial choices, but when debt struggles become overwhelming, we’re ready to come alongside you with a plan to pay off those outstanding balances.
TurboDebt consistently earns 5-star reviews on Trustpilot and Google, proving time and again that we’re a reliable partner on your quest to become debt-free. If you’re living in the Chicago area and find yourself struggling with thousands of dollars in debt relief, contact us today for a free consultation.