Minnesota Debt Relief
17 MIN READ
Published April 05, 2023 | Updated October 02, 2023
In a Nutshell
While many Minnesota residents were already struggling with outstanding debts from credit cards, personal loans, and medical bills, the pandemic slowed economic progress down even further in the state.
Among other effects, there was an increase in unemployment rates, while, at the same time, a rise in interest rates. This pushed home prices up in many locations like St. Cloud, where the median cost of a home grew 10%, causing even more people to go into debt.
During the initial economic downturn in 2020, Minnesota lost more than 13% of its employment. As a result, most people found themselves in a hard place, grappling with debts that came with the loss of jobs and tough economic times.
If you’re among those affected by the rise of secured or unsecured debts, debt relief options such as management programs, settlement, or consolidation loans may offer effective ways to help get your finances back on track.
Read on to learn more about common types of debt that Minnesota residents are struggling with, your best option to achieve debt relief, and important debt and financial resources available in the North Star State.
Minnesota’s Debt Relief Landscape
With an average consumer debt of $104,492 in Minnesota and an unemployment rate of 2.8%, consumers have been forced to accumulate more secured and unsecured debt. When unsecured debts like credit cards accumulate, consumers can find it daunting to pay them off due to compounding interest and late payment fees.
Several major Minnesota debt relief programs are offered by third-party debt relief companies. At TurboDebt, we have experience negotiating with lenders for a reduced payment on your debt. Other organizations can help you navigate the process of debt consolidation or credit counseling.
For thousands of Minnesota residents, debt relief organizations like TurboDebt can help individuals and families get back on track toward living a debt-free life.
Minnesota's Economic Picture
With job opportunities and overall affordability, the North Star State ranked as the 10th richest state in the U.S. However, consumer debt in Minnesota is high, with a large portion of payments going toward mortgages and student loans.
Over the last year, the increase in interest rates led to a decline in the housing sector, as the demand for houses dropped and monthly mortgage payments went into delinquency. Factors like these lead to an increase in household debt resulting in limited consumer spending.
Debt and Finance Statistics for Minnesota
Average Consumer Debt
The average consumer debt in Minnesota is $104,492. This figure assists individuals and economic experts in identifying the financial burdens people face across the country. In this case, Minnesota's average sits well over the national average of $101,915.
Credit Card Debt
However, while this average might be lower, it doesn’t mean people aren’t struggling to pay down their cards. At TurboDebt, credit card debt remains the number one reason people come to us for help.
Auto Loan Debt
The average auto loan debt in Minnesota is $19,021, lower than the national average of $20,987. However, debt from car loans has been on the rise in recent years and can be attributed to the federal government hiking interest rates to try and curb inflation, in addition to the shortage of chips and semiconductors used in the manufacturing of cars, pushing prices up.
The median home value in Minnesota is $314,800. However, 28.4% of these homes sold below the list price as the demand for housing dropped even as builders tried to woo investors.
Due to the increase in interest rates, the affordability index on home mortgages dropped by 24.6%, which increased the average cost to own a home in Minnesota to $1,682 per month. This continued to push mortgage debts up in the state, with increasing numbers of residents seeking debt relief due to their mortgages. Residents of Minneapolis also pay a median rent of $1,273, causing more debt for housing-related issues.
Student Loan Debt
Residents of Minnesota owe an average student debt loan of $33,604 against the national average of $28,950. The state of Minnesota has a high post-secondary education level, as 93.6% of Minnesotans have attained higher learning.
Minnesota ranks as the 14th leading state with household debt as of 2019. The state’s average household debt loan is $55,380, with a debt-to-income ratio of 1.29.
The number of people filing for bankruptcy has been on a steady decline in the past decade. In 2022, only 5,535 bankruptcy cases were filed compared to the previous year’s 5,754 cases. Of these, 4,089 were Chapter 7 cases, and 1,431 were for Chapter 13, the most common filings for individuals in debt.
Average Income and Employment
Minnesota's labor force participation is 69.1%, above the national average. Minnesota's median household income is $77,706, while the average per capita income is $41,204. This places the state in good standing when it comes to earning money relative to the nation.
As mentioned previously, Minnesotans have the highest credit score in the nation at 742 against the national FICO score of 714. This means most Minnesotans have earned an effective credit score for accessing low-interest loans, helping them keep interest rates down when securing loans.
Minnesota ranks 38th in identity theft, with 4,499 cases reported out of 100k residents. The median fraud cost was $300, with the following types of identity theft ranking at the top:
- Credit card fraud: 50%
- Other identity theft: 21%
- Bank fraud: 15%
- Phone calls or utility fraud: 13%
- Loan or lease fraud: 9%
Banking and Tax Info
Minnesota charges an income tax, state tax, local tax, and property tax. The top income tax rate is 9.85%, the state’s sales tax rate is 6.875%, and the maximum local sales tax rate is 2%. Minnesota's average property tax rate is 14.5%, with an exemption of $3 million.
Minnesota is home to 307 local and national banks with thousands of locations serving residents. The banking sector is expected to continue to grow because of the low delinquency rates and high FICO scores that favor the sector.
How TurboDebt Helped Clients in 2022
In 2022, TurboDebt served a total of 1,538 clients, with 610 of them enrolled in our debt relief program. The average enrolled debt for clients was $24,338, for a total of $14,846,372 in enrolled debts.
Our professional representatives saved clients an average of 57.08% of the total enrolled debt, bringing the saved amount to over $8.7 million before service fees.
Top Types of Debt to Get Relief from in Minnesota
TurboDebt assists Minnesota residents in obtaining debt relief by enrolling them in a debt relief program. While not limited to the following types of debt, the majority of our clients contact us due to one of the following:
Credit Card Debt
High student loans, increased payments for auto loans, and high mortgage fees are all causes of high consumer spending, increasing credit card debt in Minnesota.
Credit card balances can quickly add up as you incur a late repayment fee whenever you’re overdue. Also, the compounding effects of high interest lead to sky-high repayment plans, making credit card debt relief programs an option for Minnesota residents struggling with outstanding credit card bills.
If you have mounting credit card debt, our specialists can help you come up with a plan to accommodate your unique situation. We often help negotiate with creditors on your behalf to lower your total debt burden, and help you get into a single monthly payment. We can also provide advising services if you’re considering bankruptcy or another option. We work with individuals looking to reduce their credit card debt before filing for bankruptcy, or prior to a foreclosure.
The cost of a divorce attorney in Minnesota is high, resulting in divorce costs ranging from $3,000 to $100,000. Worse, your divorce debt might increase because of your spouse’s debt since Minnesota is “an equitable distribution” state.
TurboDebt debt relief programs can assist you in addressing your divorce debt. Start with a free consultation to find your best path forward.
Minnesota ranks high in top factors leading to business success, making it an excellent place to start a business. With a conducive environment for business, many new company owners apply for loans since they lack the starting capital.
Delaying repayments or struggling to make payments on time means your business might fall under the possession of your lenders. It can also reduce your profitability.
If you’re struggling with business debt in Minnesota, know that there are several options for relief, and TurboDebt is here to assist you.
In 2022, 2% of Minnesotans defaulted on their medical bills, with a median medical debt of $418. This can make access to health insurance difficult and costly, often increasing your medical debt.
Many non-profit credit counseling services offer services to assist with medical debt issues. You may also qualify for a debt management or settlement plan to help you tackle debt and regain access to premium, cost-effective healthcare. To learn more about your options, contact TurboDebt.
Mortgage payments continue to rise from the hike in interest rates. This has led to an increase in late repayments of mortgages by Minnesotans, thus increasing their homeowner debt.
At TurboDebt, we can help you overcome excessive mortgage debt by guiding you through a debt management plan to eliminate your unpaid balance over two to four years, on average.
The Minnesota Public pension system was once hit by a crisis which led to the residents of Minnesota owing $6,000 in pension funds. For example, retirees living in Winona, the poorest city in Minnesota, make an average household income of $48,653, which can strain someone on a fixed income.
Let the TurboDebt team help you with retirement debt by directing you to the best financial programs available for you.
Options for Debt Relief in Minnesota
Residents of Minnesota seeking to avoid collections agencies and other complications from outstanding balances can benefit from several debt relief options, including the following:
Debt Management Programs
A debt management program uses varied solutions to help you get your debt under control. You'll often create a debt management plan as a roadmap to making payments and budgeting to control your debt each month. Using a debt management plan, your credit counselors will then negotiate with your lenders for a reduced interest rate, a fixed repayment rate, or a cancellation of late repayment fees.
Debt Consolidation Loans
Debt consolidation loans are a form of debt relief program that involves applying for funds to pay off your outstanding balances for multiple accounts. Residents with a good FICO score stand to benefit from this program since they can usually access loans at lower interest rates.
The loan you acquire is used to settle your debts, leaving you with one monthly loan payment. Like the one above, debt consolidation deposits are made into a savings account for a lump sum payment.
When in a debt consolidation program, be cautious of lenders who later increase their interest rates to a higher percentage. Also, the repayment process can last from 5-10 years, making the repayment period longer.
Debt settlement is a way to minimize the total amount you owe. During the debt settlement process, you or a professional will negotiate with lenders to reduce your payment by as much as 50%.
After you agree to a settlement with your creditor, you'll either pay a lump sum or set up a plan through a debt settlement company. You'll typically pay fees to the organization for administering a savings account used to make monthly payments toward your debt.
Once the lender has agreed to a debt settlement plan, you'll also need to file the waived portion of your debt as income tax with the IRS.
Another option to find debt relief is through a private or nonprofit credit counseling agency. Certified credit counselors from these organizations can offer advice on the following issues:
- Money and debt management
- Debt management plans
- Copies of your credit reports and scores
- Educational materials and workshops on personal finance
Bankruptcy cases in Minnesota have been on a downward trend as a result of Minnesotans making consistent monthly payments and finding debt relief.
Filing for bankruptcy is one of the debt relief methods used by Minnesotans to reduce or eliminate debt. However, this process negatively impacts your financial health. Bankruptcy cases will stay on your credit report for 7-10 years, limiting your access to loans during that period.
Debt forgiveness programs can forgive all or parts of your debt without hurting your credit report. However, this debt relief option is only used for unsecured debts like credit card balances, student loans, and personal loans. Secured personal loans like auto loans and mortgages may result in repossession or foreclosure to settle the debt.
This option typically requires debtors to meet strict requirements based on their profession or income. Another downside of debt forgiveness is that you have to file all of your forgiven debt as income with the IRS.
Debt and Financial Hardship Resources
The following debt and financial hardship resources listed below are meant to help those with immediate financial needs in the state of Minnesota:
Temporary Assistance Programs
The Minnesota Department of Revenue offers financial hardship resources which include basic needs such as food, clothing, rent, water, heat, and medical attention when needed.
Some of the temporary assistance programs in the state include the following:
- The Bridge to Benefits seeks to improve the welfare of families and individuals by linking them to public works support and tax credits.
- The MNbenefits is an online financial hardship resource that seeks to offer cash assistance, food assistance, emergency assistance, housing grants, and even child care assistance.
- Telephone assistance plans in the state offer discounts on telephone calls and internet services to low-income residents.
State Health and Human Services
With a median medical debt of $418, Minnesotans can access health insurance under the following packages:
- MinnesotaCare and Medical Assistance are managed by the Minnesota Department of Human Services. These programs offer low-cost or no-payment health services to those in need, including uninsured and unemployed Minnesotans.
- Premium tax credits are available for individuals who’ve enrolled in private health insurance plans through the state’s health coverage program. These tax credits lower your monthly insurance payments, and all household income levels are eligible.
- The 2023 cost-sharing reductions are available for a qualifying individual with a maximum household income of $33,975 and a maximum household income for four of $69,375.
- The National Alliance on Mental Illness in Minnesota offers online courses and support groups to an individual with mental illness. Other mental health resources include the integrative psychiatry and wellness program.
Minnesota families in need of child care assistance should contact the Child Care Aware parent line to qualify for Child Care Assistance programs and Early Learning Scholarships.
Shelters for the Homeless
The state of Minnesota has several programs geared toward preventing homelessness that low-income and disabled residents can take advantage of. Programs that offer housing assistance in Minnesota include the following:
- Crisis housing assistance program where mentally ill residents are given income supplements to cover their rent, mortgage, and utilities.
- Emergency assistance is a one-time income supplement initiative for low-income individuals to help them pay for rent, utilities, or mortgages.
- The family homeless prevention and assistance program gives grants to families or individuals who are 200% below the poverty level. The grant covers rent, mortgage, utility, or other housing costs related to owning or maintaining a home.
Free Transportation Services
Minnesotans can enjoy subsidies on metro pass cards to access the state’s buses and trains for transport. The state also promotes a bike-to-work campaign with bicycle lockers and ramps spread in the state with a zero payment or low-annual cost service fee.
Other programs that reduce the cost of transport in the state are the rideshare matching program and the guaranteed free ride home program that’s in partnership with Metro Transit.
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Finding Debt Relief in Minnesota
Enrolling in a debt relief option in Minnesota may be your best option for living a debt-free life. However, you should be careful to avoid scams when pursuing a debt relief company. Look for an accredited organization, and check out their website and reviews from trusted sources.
TurboDebt’s reputable services give you access to debt relief options tailored to your unique financial picture. Get a free debt relief consultation today to benefit from our high success rate in managing and reducing debt for our customers.