Iowa Debt Relief
22 MIN READ
Published April 07, 2023 | Updated May 04, 2023
In a Nutshell
There are many options for debt relief in Iowa, including credit counseling, debt consolidation, debt management, debt settlement, or bankruptcy.
While Iowa residents have higher incomes and credit scores and lower average amounts of debt compared to much of the rest of the country, it does not make them immune to needing to search for relief.
The Hawkeye state has one of the lowest poverty rates in the country. However, debt can devastate your financial health, regardless of your level of financial security.
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. Get in touch or continue reading to learn about the types of debt that many Iowa residents struggle with, the best relief options, and important financial hardship resources.
TurboDebt can help Iowans in serious debt
TurboDebt knows that getting rid of debt can be overwhelming, especially if you have a lot of other bills to pay. However, if you’re committed to following a strict regimen, you’ll be on your way to escaping the cycle of debt.
Iowa is a beautiful place to live, but household debt has increased sharply all over the country since the COVID-19 pandemic. If you’re an Iowan struggling with debt, you’re definitely not alone. In the following paragraphs, we’ll talk about debt issues Iowa residents face and the debt relief options available to them. We hope this information will be valuable and helpful to you in your debt relief solution journey.
How does debt relief work in Iowa?
Some of the best debt relief companies are businesses that can help you to talk to the people you owe money to on your behalf. They aim to get your creditors to settle your high-interest debt for less than the total amount you owe.
These companies often say they can help you cut your debt significantly. This may sound good, but be sure to fully understand how different debt relief companies deal with creditors, as it can affect your credit score.
There are several different ways people can work on reducing their debt, including debt settlement, debt counseling, debt consolidation, and bankruptcy. The best solution for you will depend on your level of debt and type of debt. You should ensure you work with a reputable debt relief business by checking their reviews and ratings on places like Trustpilot and the Better Business Bureau. If you do this, it will improve your likelihood of improving your financial situation.
Iowa Debt and Finance Statistics
Iowa has some of the country’s lowest debt in several areas and average debt in others. However, like the rest of the country, Iowa’s consumer debt continues to grow. Here’s a look at overall debt stats in the Hawkeye State:
Average Consumer Debt in Iowa
Iowa has an average poverty rate of residents living below the line. Even though this is in line with the national average, it doesn’t mean that those living in the state haven’t accumulated debt. Iowa’s average consumer debt stands at $79,069.
Credit card debt
Iowa had the lowest average credit card debt in the United States in 2022 at $4,609. The average American credit cardholder had $5,589 in credit card debt in Q1 2022.
Auto loan debt
Auto loan debt is secured because your loan is provided based on the vehicle acting as collateral. Iowa had an average auto loan debt of $20,882 in 2021, up 5.9% from the previous year.
The median house price in Iowa was $194,074 as of April 2023, up 7.9% over the previous year.
Like overall debt, mortgage debt is rising in the United States. Experian reports that between September 2020 and September 2021, mortgage debt increased by 7.6%, reaching $10.3 trillion. At this time, Iowa’s mortgage debt increased 5.6%, from $142,542 to $150,537. Despite this increase, Iowa residents carry among the least amounts of mortgage debt in the country, ranking higher than only seven other states in 2021 mortgage debt.
Student loan debt
Iowans owe significantly less student loan debt on average, according to educationdata.org. Iowans owe $13.2 billion in student loans, with an average debt of $30,848. Four hundred thirty-three thousand three hundred people in Iowa — 13.6 percent of state residents — owe student loans. About 55 percent of those debtors are under the age of 35.
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.
The number of bankruptcies filed in 2005 was the highest it has ever been. One out of every 55 American families declared bankruptcy that year. Since then, 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 years to improve your credit score during 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 2.9% in February 2023.
Per capita income for the average Iowan was $34,817 in 2021. The median income per household was $65,429 at the same time. 3,200,517 million people lived in the state.
Iowans had one of the better average credit scores in the country in 2022 at 729, rating 15th. That is higher than the national average credit score, at about 716.
According to the Consumer Financial Protection Bureau, a credit score evaluates your past credit history and current credit 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 ratings. It's also how much of a loan you can get and at what interest rate.
A business calculates a credit score using a mathematical method or scoring model.
Iowa ranks 47th in the nation for rates of identity theft with 3,758 total reports, or 119 reports per 100,000 residents.
More than 395,000 individuals claimed that someone had filed a bogus government document under their name. This was the most common sort of identity theft incident.
Ransomware attacks become less complicated and more profitable due to this circumstance. The number of victims in the United States increased by 311 percent between 2019 and 2020, costing an estimated $350 million. The NCC Group's 2021 Annual Threat Report found that the number of ransomware assaults worldwide doubled from the previous year, growing by 93%. 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 249 commercial banks holding over $120 million in capital.
Income tax rates in Iowa range from 4.40 percent to 6.00 percent for single filers, according to taxfoundation.org. Certain governments also levy local income taxes. Businesses in Iowa have an income tax rate between 5.50 and 8.40 percent. 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 2022
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 1,061 residents from Iowa. Of those, 341 clients enrolled in our custom debt relief programs. Each client's average debt was $21,026, leading to a debt enrollment of $7,169,846. On average, Iowa residents saved an amazing 59.51 percent on their debts before fees. So, if you’re ready for debt relief, TurboDebt has been proven to help Iowans escape the debt cycle.
Top Types of Debt to get Relief from in Iowa
Credit Card Debt
As noted above, 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 seven other states.
There are various options available to Iowans who are trying to find a solution to deal with their credit card debt. Banks, credit unions, internet lenders, non-profit and for-profit credit counseling services, and debt settlement firms are all resources available to those working to repay their credit card debt.
Iowans should look at their own financial situation while assessing the benefits and drawbacks of using a debt reduction company. There are five methods to deal with credit card debt: debt consolidation loans, debt settlement, debt settlement via a nonprofit, bankruptcy, and debt management programs.
Divorces between married couples are inevitable. 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 dollars 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.
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 investment that may lead to quick growth vs. capital that could drive your firm to its knees.
Debt evaluations, both favorable and poor, should be made in light of the company's objectives. Money should be borrowed only when necessary for accomplishing goals, making progress, or fueling growth. It's easy to rack up debt to get things done 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 yours 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 is an unavoidable reality of living in the United States: even if you dutifully follow the recommendations for preventive care, accidents & emergencies still happen. Medical bills are racking up billions of debt in the United States, from Kansas to California.
According to the CFPB, Iowans owe $447 million in medical debt. About 9 percent of Iowa residents have medical debts which 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 larger.
In 2022, the average mortgage debt for US 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.
Only in Iowa and seven other states is mortgage debt below $150,000. The state’s low level of mortgage debt is probably partly attributable to the relatively low cost of dwelling there. Iowa has a median household income of $65,429, while the average home price is just under $200,000 as of April 2023.
Over 46% of all Americans anticipate retiring in debt. With a limited income, debt repayment may be very 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 see a financial counselor.
Options for debt relief in Iowa
Debt management programs
In finance, a debt management program generally entails a third party helping a debtor out in exchange for a monthly fee that is applied to the debts. Put another way; a debt management firm will 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 rather assist you in getting your finances back under control.
Debt consolidation loans
A person may consolidate their debt by taking out a new loan to pay off all of their existing debts (such as credit card bills or other loans) in a single, more manageable monthly payment. If you have many loans or credit cards, consolidating them might save you time and money. But keep in mind that a debt consolidation loan won't eliminate your debt and may instead result in higher monthly payments.
Find out what you can do to prepare for a debt consolidation loan application and what your alternatives are.
Debt settlement programs might be an option to help you manage your debt and eventually get out from under its weight. But use caution since things may only become worse if you don't deal with a trustworthy firm. The choice of a reputable debt settlement agency, such as TurboDebt, is crucial since many of these businesses make exaggerated claims. 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. Prices vary significantly, but it is possible to reduce interest rates, monthly payments, collection calls, late penalties, and over-the-limit surcharges. TurboDebt doesn't charge any up-front fees as some other organizations do, and we can help you make a payment plan by setting up affordable, manageable monthly installments.
Credit counseling is different from debt management. The Federal Trade Commission has determined (as of 27 October 2010) that debt relief companies cannot request payment upfront.
After a bankruptcy filing, debtors have six months to undergo credit counseling with a government-approved organization, per the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Debtors who want their debts forgiven must also complete an approved course with credit counselors.
Credit counseling firms provide consumers with no-cost budgeting and debt-repayment legal advice and planning services. A consumer’s financial situation is addressed with a counselor who will help them build a particular strategy to fix their money troubles, or the consumer is sent to a debt management plan (DMP) company, such as a debt settlement business.
Credit counseling agencies often charge a set fee to evaluate a client's current financial condition and recommend the best course of action. Yet, under current legislation, credit counseling organizations are required to provide their services at no cost to those with low incomes. The U.S. Trustee Program in the Department of Justice verifies and approves organizations that provide credit counseling and debtor education.
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 terminating 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.
Both Chapter 7 and Chapter 13 make up the vast majority of petitions. There are many reasons why Chapter 7 bankruptcy is the most popular option for debtors. You can finish it in months, so it's a relatively fast option. Moreover, there are no costs associated with not paying off debtors. This arrangement is ideal for those with limited assets.
The wealthy, however, are not immune to the risk of losing assets, particularly if their wealth is invested in luxury goods. If you're late on payments or have amassed too much equity in your home or automobile, you may be forced to sell them. The same goes for your RV, baseball card collection, or timeshare in the Bahamas. While filing for Chapter 7, you cannot request a payment plan to make up for missed automobile or mortgage payments as you might in Chapter 13. Hence, if you are late in filing your taxes, you risk losing your house and vehicle.
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. However, chapter 13’s payment plan enables it to provide advantages not accessible in Chapter 7. If you file for bankruptcy, you get to retain everything you own and may even be able to avoid losing some of it, like a house to foreclosure or a vehicle to repossession. This chapter allows you to negotiate a repayment plan with a creditor for debts that cannot be discharged in bankruptcy. The most disappointing aspect of this option? This may rack up a hefty bill. A lot of folks can't manage the regular payment.
To facilitate quicker and more manageable debt cancellation, the Public Service Loan Forgiveness (PSLF) program was launched in 2007. After ten years of making their payments, if the borrower meets the program's qualifying standards, their 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.
When it comes to state-based student debt forgiveness programs, Iowa is among the leaders. In any case, there are a number of federal debt cancellation options that Iowans may be eligible for.
Refinancing your private student loans might make more sense to see if you can receive a cheaper interest rate and payment.
Debt and Financial Hardship Resources
Sometimes personal circumstances mean you can’t pay back your debts immediately. When you are struggling, 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 another city or town in Iowa, there are places you can get help.
Temporary assistance programs
The federal government does provide help to those who are having trouble paying their mortgage or are facing foreclosure. To learn more about state mortgage and foreclosure programs, homeowners should contact their state or a local non-profit organization such as the HUD agency.
There are a variety of aid programs that may help with rent payments. There are several HUD-approved agencies and other federal housing aid programs available to low-income households. Government aid in the form of HUD vouchers will help people avoid eviction by covering expenses, including rent, security deposits, and relocation fees.
Find a wide range of low-income support programs to aid struggling families with their other needs. Financial aid is available via a variety of programs, many of which are administered at the federal or state level and consist of grants, loans, and gift programs. The government provides aid to all those who qualify, including the working poor and low-income families.
The Housing Choice Voucher Program, which was established by HUD, is still another alternative. Housing assistance is provided 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. You can explore the Section 8 housing aid program more by reading up about it.
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)
- Child Care Assistance
- Cash Assistance
- State Supplementary Assistance
- Job Training
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
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.
Free transportation services
There are non-emergency medical transportation services available through the Iowa Department of Health and Human 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 your state's Medicaid MCO to learn more about your coverage and which transportation service will be providing your rides (MCO).
Find Debt Relief in Iowa
When you are in debt and seeking help, it is critical to research any company you may ask for help. 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. If you need help getting out of debt, you can rely on us for advice and guidance in determining the most effective course of action. In most cases, our individualized 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. Your first consultation with us is on the house. Get in contact right now if you want to reduce your debt load and pay it off within 24 to 48 months.