Iowa Debt Relief

In a Nutshell

The Hawkeye State has one of the lowest poverty rates in the country. While Iowa residents have higher incomes and credit scores and lower average amounts of debt compared to much of the rest of the country, this doesn't make them immune to the need for relief.

There are many options for debt relief in Iowa, including credit counseling, debt consolidation, debt management, debt settlement, and bankruptcy.

TurboDebt can help you through the process with a free consultation and guide you to the debt solution that is right for your unique situation. Continue reading to learn about the types of debt many Iowa residents struggle with, the best relief options, and important financial hardship resources.

How Does Debt Relief Work in Iowa?

Debt relief companies are businesses that can help you manage your outstanding balances. They can also help you connect directly with creditors by negotiating with them on your behalf for reduced payments and lower interest rates. Their primary aim is to get your creditors to settle your high-interest debt balances for less than the total amount you owe.

The best solution for you will depend on your level and type of debt. Before you start, you should ensure that you work with an experienced, reputable debt relief business by checking their reviews and ratings on places like Trustpilot and the Better Business Bureau.

Choosing a debt relief solution from a reputable organization can significantly improve your financial situation. Check out thousands of 5-star TurboDebt reviews from trusted sites to discover our commitment to superior customer service.

Iowa Debt and Finance Statistics

Like the rest of the country, Iowa’s consumer debt continues to grow. Average consumer debt is calculated by looking at the amount of debt residents owe for credit card balances, student and auto loans, and mortgages, providing a good picture of the average debt individuals carry.

Here’s a look at overall debt stats in the Hawkeye State:

Credit Card Debt

Iowa had the lowest average credit card debt in the United States in 2022, at $4,609 per consumer, while the average American credit card holder had $5,589 in credit card debt in Q1 2022.

Auto Loan Debt

Auto loan debt is considered secured debt because your vehicle acts as collateral for the loan. Iowa had an average auto loan debt of $20,882 in 2021, up 5.9% from the previous year.

Mortgage Debt

The average home price in Iowa was $204,526 as of June 2023, up 6.9% over the previous year.

Like overall debt, mortgage debt is rising in the United States. Experian reports that between September 2021 and September 2022, mortgage debt increased by 7.3%, reaching $11.22 trillion. At this time, Iowa’s mortgage debt increased 5.6%, from $142,542 to $150,537.

Despite this increase, Iowa residents carry some of the lowest amounts of mortgage debt in the country, ranking higher than only seven other states in 2021.

Student Loan Debt

Iowans owe significantly less student loan debt, with a total of $13.2 billion in student loans, averaging $30,848 per resident.

In Iowa, 13.6% of state residents owe student loans. About 55% of those debtors are under the age of 35.

Household Debt

According to the New York Fed’s Center for Microeconomic Data, household debt in the United States has grown by nearly $4 billion in the fourth quarter of 2022, bringing the total to $16.9 trillion.

In Iowa, the average household debt increased by 3.2% from 2021 to 2022 to $79,069. Despite this increase, Iowa has one of the country's lower rates of average household debt, ranking higher than only 11 other states.

Bankruptcy

Bankruptcies in the U.S. reached an all-time high in 2005 when one out of every 55 American families declared bankruptcy. Since 2011, those numbers have steadily dropped as U.S. citizens pursue other forms of debt relief. However, some Americans still pursue this option as a way to manage debts.

Filing for bankruptcy is one to minimize or eliminate debts, though it often takes several years to improve your credit score after going through this process. In 2022, 2,305 Iowa residents filed for bankruptcy.

Average Income and Employment

According to the U.S. Bureau of Labor Statistics, Iowa had an average unemployment rate of 2.7% in April 2023.

Per capita income for the average Iowan was $34,817 in 2021. The median income per household was $65,429 in the same year, with 3,200,517 million people living in the state.

Credit Scores

Iowans had one of the highest average credit scores in the country in 2022 at 729, ranking 15th. That is considerably higher than the national average credit score, at about 716.

Credit scores evaluate your past credit history and current standing to forecast your future credit behavior, such as your likelihood of making loan repayments on time.

Mortgage, credit card, and vehicle loan approvals, as well as tenant screening and insurance premiums, all make use of credit reports and scores. Credit scores, along with your income level and financial assets, also determine how much of a loan you can get and at what interest rate.

Identity Theft

Iowa ranks 47th in the nation for rates of identity theft, placing them at one of the very lowest rates of occurrence, with 3,758 total reports, or 119 reports per 100,000 residents.

Ransomware attacks have become less complicated and more profitable than traditional means of identity theft and credit card fraud. Experts say the number of individuals who still work from home is a major component in the success of this kind of assault.

Banking and Tax Info

The Iowa Division of Banking oversees consumer lenders, mortgage firms, real estate appraisers, appraisal management organizations, payday lenders, and all state-chartered banks in Iowa. The Hawkeye State has 246 commercial banks holding over $120 billion in capital as of Q3 of 2023.

State income tax rates in Iowa range from 4.40% to 6.00% for single filers, according to taxfoundation.org. Certain county and city governments in Iowa also levy local income taxes. Businesses in Iowa have an income tax rate between 5.50 and 8.40%, depending on their level of revenue. Sales tax rates in Iowa range from 6.00% at the state level to a maximum of 1.00% at the municipal level for an effective statewide rate of 6.94%.

How TurboDebt Helped Iowans with Debt Relief in 2023

If you’re ready to escape debt, you’re ready to work with TurboDebt. With accessibility at the top of our priority list, last year alone, we helped 2,219 residents from Iowa. Of those, 656 clients enrolled in our custom debt relief programs.

The average client debt was $22,056, leading to a total debt enrollment among Iowans of $14,468,414. Last year, TurboDebt helped Iowa residents save an amazing 54.42% on their debts before fees. When you’re ready for debt relief, we're here to help Iowans escape the debt cycle.

Top Types of Debt to Get Relief from in Iowa

Credit Card Debt

As mentioned before, Iowa has the lowest average credit card debt in the United States. The midwestern state also has a fairly low cost of living, only higher than a handful of other states. However, credit card debt is still the area we serve most at TurboDebt, and many Iowans still struggle to pay off monthly debt from their outstanding accounts.

When you're ready to find a solution for credit card debt, you can choose from several options. Banks, credit unions, non-profit and private credit counseling services, and debt management or settlement companies are all resources available to those working to repay their credit card debt.

Divorce Debt

About half of all marriages in the United States end in divorce annually. Yet, this doesn't prove that 50% of American marriages are split up. Most of these high divorce rates come from only a few states. There are other states in the US with comparatively low divorce rates. At just 1.3 divorces for every 1,000 married couples, Iowa boasts the nation's lowest divorce rate.

Divorce can be costly for those who do end up splitting up.  In fact, the average divorcee has over $10,000 in debt that must be paid to debt collectors because of their divorce. TurboDebt wants to ensure divorce doesn’t ruin your financial future, so our expert team can help you work to become free from divorce debt.

Business Debt

Debt is frequently a necessary partner on the road to success in business. The expansion of your company is fueled by your ability to raise capital or get loans. The challenge is figuring out how to prioritize investments that lead to growth instead of taking on even more debt to cover losses.

Evaluate favorable and poor business debt based on your company's objectives. Borrowing money when it's necessary for accomplishing goals, making progress, or fueling growth is a good thing, but it's easy to rack up debt without giving much thought to how you'll handle the leftover cash. Debt can be a heavy burden for any company, so if you feel that your debt is getting in the way, now may be a good time to explore whether you qualify for a debt relief program in Iowa.

Medical Debt

Medical debt is often unavoidable for residents of the Hawkeye State. Even if you dutifully follow the recommendations for preventive care, accidents & emergencies still happen. The devastating economic and medical effects of the pandemic also left many Iowans struggling to pay medical bills.

According to the Consumer Financial Protection Bureau, Iowans owe a total of $447 million in medical debt. About 9 percent of Iowa residents have medical debts that have gone into collections.

By June 2021, U.S. citizens incurred $88 billion in medical debt. As not all medical debts in collections are reported to credit bureaus, the true overall amount of medical debt in the United States is likely even larger.

TurboDebt can help you overcome unsecured debt like outstanding medical bills. Call for a free consultation to find out how you can start living debt-free.

Homeowner Debt

In 2022, the average mortgage debt for U.S. homeowners was $231,464. The amount of debt that American homeowners are paying off varies widely from state to state due to the many different geographical circumstances that might affect mortgage debt.

Iowa is one of only seven states with an average mortgage debt below $150,000 per household. The state’s low levels may be linked to the relatively low cost of dwelling in the Hawkeye State, with the average home price just over $200,000 as of April 2023.

Retirement Debt

Over 46% of all Americans anticipate retiring in debt. With a limited income, debt repayment can become challenging and jeopardize retirement savings. At the present day, senior citizens in the United States owe more than ever before.

We can see that the cumulative debt of Americans over the age of 70 has climbed by 614% from 1999 to 2021, reaching $1.27 trillion. To plan for retirement, it is highly recommended that you seek a financial counselor.

If you're already struggling with debt in retirement, TurboDebt offers solutions, even when you're living on a fixed income.

Options for Iowa Debt Relief

Debt Management Programs

In finance, a debt management program generally entails a third party helping a debtor in exchange for a monthly fee for using their services. Debt management firms operate as a go-between for you and your creditors, consolidating your payments into one monthly installment and disbursing the funds to their respective accounts. The service shouldn't cause you to go further into debt but should assist you in getting your finances back under control.

Debt Consolidation Loans

Iowa residents can consolidate their debt by taking out a new unsecured loan that’s large enough to pay off everything they owe, such as credit card bills or other loans, in effect “refinancing” all of their smaller debts into one single, more manageable monthly payment. 

If you have many loans or credit cards, consolidating them might save you time and money. Keep in mind that a debt consolidation loan won't eliminate your debt and may instead result in higher monthly payments if you have poor credit and can't secure a loan at a low interest rate. This method is most effective for those with “fair” to “excellent” credit scores of 680 and above.

Debt Settlement

Debt settlement programs offer an effective option to help you manage your debt and eventually get out from under its weight. Choose a reputable debt settlement agency, as some businesses make exaggerated claims and ask for upfront fees before getting you started.  

The Better Business Bureau and Trustpilot are just two of many resources available to consumers who want to research the legitimacy of a debt settlement company before working with them.

Debt settlement agencies facilitate the negotiation of reduced debt obligations between creditors and debtors. Once all parties agree to a settlement, the organization can help you make a payment plan by setting up affordable monthly installments, which are paid directly to the settlement company. 

Debt settlement companies typically charge fees for negotiating and managing your account based on the total amount of debt you're trying to settle, but they are only allowed to charge you these fees once they have provided you with a legitimate service.  A debt settlement firm that asks you to pay their service fee before showing you actual beneficial results on your financial situation is operating illegally.

Credit Counseling

Credit counseling firms provide consumers with no-cost budgeting and debt-repayment advice and planning services. Credit counselors address a consumer’s financial situation, helping them build a particular strategy to fix their money troubles. They often review a client’s credit report and discuss debt relief options. After completing financial education courses, the consumer is often sent to a debt management plan (DMP) company, such as a debt settlement firm.

Credit counseling agencies often charge a set fee to evaluate a client's current financial condition and recommend the best course of action. However, low-income individuals can typically use credit counseling services for free through various legitimate non-profits. The U.S. Trustee Program in the Department of Justice verifies and approves organizations that provide credit counseling and debtor education.

Bankruptcy

A bankruptcy filing in Iowa is similar to filing in any other state. For a new financial beginning, you must file for bankruptcy under federal law rather than Iowa law, which is done by petitioning the courts to allow you to terminate your debt agreements with your creditors.

Nonetheless, the laws of Iowa have an important bearing on the situation. They will inform you what belongings you may retain in a bankruptcy proceeding. If you're considering bankruptcy as an Iowa resident, it's a good idea to talk to a legal professional for advice before filing.

Both Chapter 7 and Chapter 13 bankruptcy make up the vast majority of petitions. There are many reasons why Chapter 7 bankruptcy is the most popular option for debtors. You can typically complete Chapter 7 in a few months, so it's a relatively fast option. Moreover, there are little to no costs associated with getting your debts discharged. This arrangement is ideal for those with limited assets.

Chapter 13 bankruptcy is a more serious undertaking. Instead of the simpler process of Chapter 7, Chapter 13 filers have three to five years to settle their debts through a court-approved repayment plan that must be adhered to for the entire duration of this 3-5 year process. 

However, a debt reorganization and repayment plan under Chapter 13 can provide advantages not accessible in Chapter 7. If you file for Chapter 13 bankruptcy, you get to retain everything you own and may even avoid losing some of it, like a house to foreclosure or a vehicle to repossession. 

It’s important to note that filing for bankruptcy can negatively impact your credit report and profile for up to 10 years. Choose this option carefully and treat it as a “last resort” type of solution when considering your other debt relief alternatives.

Debt Forgiveness

Debt forgiveness is less common than other forms of debt relief and requires you to meet specific criteria to qualify for a program. Once you meet the requirements of a debt relief program, usually provided through a public or private organization, you may have your debt partially or completely eliminated. It's important to note, however, that in most cases, the amount of debt forgiveness is considered taxable income and can be included in your Adjusted Gross Income for the year in which you have your debt forgiven.

Those working for the government in full-time positions qualify for the Public Service Loan Forgiveness Program (PSLF). After meeting requirements like making 120 monthly payments, if the borrower meets the program's qualifying standards, their remaining debt will be discharged.

Teachers in Iowa can also earn loan forgiveness through the federal Teacher Loan Forgiveness Program. This program offers $5,000 or $17,500 in loan forgiveness benefits to certain full-time teachers who serve in designated low-income schools.

Tax Debt Relief

According to Brad Reichert, debt expert and founder and managing director of Reichert Asset Management LLC, Iowa provides a plan to help residents manage their tax burdens. “When it comes to seeking relief from tax debt, particularly state income tax debt,” Reichert explains, “the State of Iowa offers a particularly robust tax debt relief method called an “Offer in Compromise.” This process involves a written agreement with the Iowa Department of Revenue (IDOR) to settle an unpaid assessed tax debt for less than the total amount due.

“If the state believes it to be in their best interest to settle an unpaid tax debt, and the debt has been assessed by the IDOR, an application may be completed and submitted, along with certified funds, for the amount offered by the taxpayer,” shares Reichert. 

“There are several rules and processes, of course, but it is one way to alleviate a state income tax burden that would ordinarily be a difficult financial situation for most Iowans,” Reichert adds.

Debt and Financial Hardship Resources

Sometimes personal circumstances mean you can’t even begin to pay back your debts because you're struggling to meet basic needs. When you face financial hardship, Iowa has some programs to help you save money and get out of a financial rut. Whether you live in Des Moines, Cedar Rapids, or rural Iowa, there are places you can get help.

Temporary Assistance Programs

Iowa offers cash assistance through the Family Investment Program to help strengthen families with children. The program is limited to 60 months of assistance and is based on income.

The Hawkeye State also offers cash help through Family Self Sufficiency Grants and Refugee Cash Assistance.

State Health and Human Services

The State of Iowa’s Department of Health and Human Services offers the following assistance programs:

• Rent Reimbursement
• Supplemental Nutrition Assistance Program (SNAP)
• WIC
• Medicaid
• Child Care Assistance
• Cash Assistance
• State Supplementary Assistance
• Job Training

Child Care

Child Care Assistance (CCA) is a program that helps low-income families cover the cost of child care so that at least one parent may work, attend school, or enter training without having to worry about how to pay the bills. The state of Iowa offers free, subsidized childcare as a job incentive. To contact DHS about the benefit, you can call their phone number at: (866) 448-4605.

Shelters for the Homeless and Housing Assistance

Shelters for the homeless range from emergency shelters, where someone may stay for one night, to transitional shelters that help people find work and housing and prevent them from becoming homeless again. There are at least 20 homeless shelters in Iowa, with about eight emergency shelters in Polk County.

The federal government also provides help to those who are having trouble paying their mortgage or facing foreclosure. To learn more about state mortgage and foreclosure programs, homeowners can contact a local or federal non-profit organization such as the HUD agency.

The Housing Choice Voucher Program, established by HUD, provides help to low-income households, particularly those with a history of eviction. The government provides public housing for the low-income, handicapped, and aged, depending on their annual household income.

Free Transportation Services

Iowa's Department of Health and Human Services offers non-emergency medical transportation services. Transportation for non-emergency medical purposes and/or waiver-approved transportation may be available to Iowa Medicaid members with full benefits and clients with Medicaid Waiver benefits. Contact the state's Medicaid office to learn more about your coverage and which transportation service will be providing your rides.

Find Debt Relief in Iowa

When you are in debt and seeking help, it is critical to research any company before enrolling in a program. Falling victim to a scammer or a company that doesn’t have your best interest in mind when you’re already drowning in debt could be devastating.

TurboDebt is the company you turn to if you need professional help with your debts. You can rely on us for advice and guidance in determining the most effective course of action. Our customized approach is most effective for clients with unsecured debt of $10,000 or more.

Whether you have credit card debt, personal loan debt, or any kind of unsecured debt, TurboDebt is here to help you get back on track. We've already helped hundreds of clients in Iowa overcome outstanding debt. Your first consultation with us is free. Contact us today to start reducing your debt load. You could become debt-free in as little as 24 months!