In a Nutshell

From the rambling bayous to the streets of New Orleans, The Pelican State is home to more than great jazz and spicy gumbo. Yet, despite its rich culture, Louisiana residents are struggling to meet basic expenses amid inflation and a stagnant job market, leading them deeper into debt.

Louisiana citizens take home a median household income that’s significantly less than the national average. It’s not surprising then that 18% of Louisiana residents live in poverty compared to 11% nationally.

Pelican State residents need options to get out of debt and use more of their income to build a better future. Keep reading to find out what debt relief options are available in Louisiana.

Your Options To Get Out of Debt in Louisiana

Credit Counseling

Credit counseling organizations offer solutions for financial management through resources and personal advising.

How It Works in Louisiana
Credit counseling provides practical support for Louisiana residents looking to change how they manage their finances. Whether this means planning to overcome debt or learning more about budgeting, certified credit counselors offer a strong foundation for reshaping how Pelican State citizens handle their money.
Pros
Credit counseling is a low-cost way to start solving your debt problems. Working with a credit counselor to understand your options can help you find the most effective way to clear debts.
Cons
While certified credit counselors offer sound advice, you’ll still have to find a way to pay off your debt after enrolling with an organization.
Cost
Credit counseling usually costs very little, with low-income individuals in Louisiana often qualifying for free services.
Stats
Even though credit counseling offers Louisiana residents helpful advice, more consumers have chosen to enroll in debt settlement programs as a debt relief solution in the past decade.
Resources
Find credit counseling programs in Louisiana through the Financial Counseling Association of America.

Debt Management

A debt management program (DMP) coordinates the distribution of your monthly debt payments in return for a fee.

How It Works in Louisiana
Many credit counseling agencies also offer debt management programs as an option for clients. When you enroll in a DMP, you’ll set up a payment plan for each of your outstanding accounts and begin sending a single monthly payment to the debt management company that pays each of your creditors on your behalf.
Pros
Credit counselors managing your DMP often negotiate lower standard interest rates on your accounts or ask creditors to waive late fees you’ve previously paid. Using a DMP makes you less likely to send in late payments by helping you stay financially organized.
Cons
While a DMP can help you keep track of monthly debt payments, you’ll need to cut back on using credit during the length of the program. Most plans require you to close out your revolving credit lines and credit card accounts, leaving only one open for any necessary or emergency spending.
Cost
You’ll pay a small enrollment fee to get started, typically around $40. Once you set up your payments, you’ll also owe a fee for each account you enroll in the plan to help cover the costs of the company administering your plan and keeping you on track. This monthly fee ranges from $25-35 per account.
Stats
Louisiana residents carry an average consumer debt of $80,000, making debt relief options like DMPs essential for many across the Pelican State.
Resources
Read more about debt management and how it works.

Debt Consolidation

Louisiana residents who want to structure their own debt repayment opt to consolidate debts through a new balance transfer credit card or by taking out a debt consolidation loan.

How It Works in Louisiana
For small to medium-sized credit card debts, Pelican State residents may benefit from opening a new zero-interest balance transfer credit card. Once you move any outstanding balances to the new card, it’s easier to start making bigger payments on your account without paying huge interest charges as part of the total.
Another option is to take out a debt consolidation loan large enough to cover your current unsecured debts, like credit cards, medical bills, and payday loans, then use the funds to pay off all these outstanding accounts. This method leaves you with a single monthly payment, ideally at a lower interest rate than you’re paying on your current balances.
Pros
Consolidating via a balance transfer card can make it easier to repay your debts with little to no interest.
Consolidation loans, on the other hand, help you reorganize payments and restructure your debts with much lower interest rates and fewer account fees.
Cons
Balance transfer credit cards revert to the original standard APR for purchases or cash advances if you fail to pay off your entire transferred balance within the promotional zero-interest period. This could end up costing you a lot more money than you originally planned if you’re not careful.
With a consolidation loan, you’ll need a fair to good credit score to secure a lower interest rate than you’re paying on your current debts. If not, the price you pay in interest over the length of the loan could negate any savings you might otherwise realize as you pay off your debts.
Cost
You may owe a transfer or convenience fee of 3%-5% for your initial balance transfer when you open a new card and move funds. Also, some cards may charge low interest (1.99% to 6.99%) instead of zero percent interest during the initial promo period, so it’s important to read the contract carefully.
Calculating the cost of a consolidation loan depends on your new interest rate. You’ll need to determine if paying this rate over the entire length of the loan amounts to less interest than just paying off your debts individually.
Stats
Louisiana residents have an average credit score of 680, placing them firmly in the “good” category. This indicates that many consumers will likely qualify for better interest rates when securing a consolidation loan.
Resources
Here’s an in-depth look at the pros and cons of debt consolidation loans.

Debt Settlement

By negotiating with creditors on their own or through the help of a debt settlement organization, Pelican State residents can often reduce their debt payments significantly through this method.

How It Works in Louisiana
Consumers with large unsecured debts can enroll these balances with an organization that negotiates a lump-sum payment at a reduced amount compared to what they currently owe in return for waiving or “forgiving” the remaining balance and settling the account in full.
Once your lender agrees to accept this lump-sum payment, you’ll begin adding money to a savings account to pay off your debt all at once after you’ve collected enough.
Pros
Louisiana consumers who work with a settlement company like TurboDebt save an average of 57% on their total debt before fees.
Cons
Because you stop making payments on your debts, your credit scores with all three credit reporting agencies take a significant plunge until you pay them off and begin working toward re-establishing a positive credit history.
Cost
Debt settlement companies charge fees based on how much debt you enroll. These fees range from 15-25% of the total debt you enroll in the debt settlement program.
Stats
Over 18,000 Louisiana residents enrolled in some kind of debt settlement program in 2023.
Resources
Decide if debt settlement is the best solution for your financial situation.

Bankruptcy

Declaring bankruptcy is the last option for Louisiana residents who’ve tried other debt relief methods to no avail.

How It Works in Louisiana
It’s a good idea to consult with a bankruptcy attorney first to determine your options. Individuals usually file either Chapter 7 or Chapter 13 bankruptcy to absolve debts and restructure payments, pending their approval from the state court system.
Pros
Bankruptcy can eliminate most outstanding balances from secured and unsecured debts, giving you a clean financial slate.
Cons
The court may order you to sell off your non-exempt assets to pay your debts before allowing you to have your remaining debts discharged or forgiven.
Additionally, declaring bankruptcy will negatively impact your credit history for up to 10 years, making it very difficult to obtain new credit or sign up for new mortgage loans, apartment leases, and utility accounts. This is especially true in the first 3-4 years after your bankruptcy is discharged.
Cost
When you declare bankruptcy, you’ll pay court fees and attorney fees that can cost up to $4,500, depending on the attorney you choose to work with.
Stats
In 2023, a total of 9,175 Pelican State residents filed for some form of bankruptcy.
Resources
Discover more about the ways bankruptcy affects your finances before you choose this option.

What You Need To Know About Debt in the State of Louisiana

Statute of Limitations on Debt Collections in Louisiana

The Pelican State’s Statute of Limitations on Debt Collections governs how long a creditor can pursue a consumer in court to file a claim for an unpaid debt. Each type of debt varies in the length of time a creditor can use legal action to collect money from a debtor.

Here’s a look at Louisiana’s Statute of Limitations by type of debt:

Type of Debt Agreement Length of Time Collectible
Written Contracts10 years
Promissory Notes10 years
Open-Ended Accounts3 years
Oral Agreements10 years
Medical Debt10 years

“Louisiana has some of the longest statutes of limitations in the country when it comes to the collection of debts,” shares Brad Reichert, the founder and managing director of Reichert Asset Management LLC. “While several states match Louisiana’s 10-year length of time to collect on written contracts and promissory notes, only Vermont (14 years), Kentucky, and Ohio (each 15 years) allow a longer length of time to collect on these kinds of debts,” Reichert adds.

Student Loan Forgiveness in Louisiana

While Louisiana doesn’t offer a state-led student loan forgiveness program, residents may qualify for the federal Public Service Loan Forgiveness Program.

Resources for Financial Assistance in Louisiana

Even though Louisiana stimulus checks are no longer issued, residents can still find assistance through other state and federal programs, including the following:

Louisiana Residents Can Get Professional Help Paying Off Debt

Debt relief can be a lifeline for Louisiana residents struggling to break out of the debt cycle. TurboDebt offers personalized debt relief plans to help consumers regain their financial freedom and pay off huge debt balances.

TurboDebt Debt Relief Program Statistics in Louisiana

With over 15,000 5-star reviews on Trustpilot and Google, TurboDebt is a proven partner for trusted debt relief. Join thousands of clients from Louisiana who’ve successfully overcome debt while saving money and paying down big balances in an average of 12-24 months.

Contact us today to find out if you qualify for a cost-effective solution to your debt.