Turbo Takeaways
- Living costs in New York make staying on top of bills a constant challenge.
- Debt relief programs give NY residents the opportunity to simplify their payments and recover more quickly.
- Taking control of your debt starts with understanding the relief options that fit your situation.
Your Options To Get Out of Debt in New York State
Although the Empire State remains one of the financial hubs of the U.S., plenty of New Yorkers are facing economic struggles. With credit card and other consumer debt reaching unprecedented levels, access to debt relief is an effective solution for many New York residents.
Read on to learn more about the top debt relief options for Empire State residents to manage and reduce their debt.
Credit Counseling
Working with a credit counseling agency servicing New York State gives you professional advice and resources to manage your finances.
How It Works
New Yorkers who enroll in a credit counseling program connect with a certified credit counselor for one-on-one advice. Counselors review your credit history and score and offer suggestions to help you manage debts.
Pros
- Low-cost access to certified financial guidance
- Offers tools and education to improve money management
- Can help identify the right path before committing to a long-term program
Cons
- Won’t erase existing debts without further action
- Requires time and effort to follow through on advice
- May require completing education sessions to stay enrolled
Cost
Credit counseling programs typically cost very little compared to other debt relief services. Low-income residents may also qualify for low or no-cost services.
Stats
- Most credit counseling organizations operate as nonprofits. However, for-profit companies do exist in most New York localities as well.
Resources
Find a credit counselor in New York State and learn more about their services through the Financial Counseling Association of America.
Debt Management
Debt management involves making a plan to pay off multiple debts with the help of a third party that helps administer payments and manage your credit accounts.
How It Works
A debt management plan (DMP) helps New Yorkers reorganize monthly debt payments through a credit counseling organization or other debt relief company.
Pros
- Simplifies repayment by consolidating multiple bills into one payment
- May reduce interest rates and waive late fees
- Builds positive payment history over time
Cons
- Often requires closing credit card accounts during the program
- Monthly service fees add to overall costs
- Missing a payment can remove you from the plan
Cost
Debt management programs typically charge a modest initial set-up fee and monthly fees for each debt you’re paying off. Fees cost about $40 to start the program and $20-30 monthly for each managed account.
Stats
- Residents of New York State carry an average total consumer debt of $93,361.
Resources
Read more about how debt management plans work and the services they provide.
Debt Consolidation
This option works as a DIY solution to transfer debt balances to a credit card or through a traditional debt consolidation loan.
When looking at debt consolidation as a method for debt relief, it’s important to check your credit report and FICO score before you apply.
How It Works
New Yorkers can open a zero-interest balance transfer credit card and move as many high-interest debts to that account as possible.
Another option is to take out a fixed-rate, fixed-term debt consolidation loan big enough to pay off all current unsecured debts. You can then repay this new loan’s balance instead of making several payments to different creditors each month.
“When looking at debt consolidation as a method for debt relief, it’s important to check your credit report and FICO score before you apply,” Brad Reichert, founder and managing director of Reichert Asset Management LLC, advises New York residents.
“While each lender has its own criteria, you’ll typically need a credit score of at least 620 to qualify for a debt consolidation loan and a score of 680 or higher to get approved for the lowest rates,” Reichert shares.
Pros
- Combines multiple debts into one manageable payment
- Balance transfer cards typically charge no interest for an initial promotional period
- Consolidation loans have lower fixed interest rates if you qualify
Cons
- Requires good credit history for favorable terms
- On a balance transfer card, interest rates can skyrocket if you fail to pay off the entire transferred balance during the promo period
- Consolidation loans can take longer to repay, costing more in interest over time
Cost
Costs for debt consolidation depend on your total transferred balance and the interest rate on the balance transfer card or debt consolidation loan.
Stats
- New York residents have an average credit score of 713.
- This score falls in the “good” category and makes it easier for many consumers to secure a debt consolidation loan at a lower interest rate in the Empire State.
Resources
Learn more about the process of debt consolidation from TurboDebt®’s resource library.
Debt Settlement
The debt settlement process can effectively eliminate up to half of New Yorkers’ unsecured debts, making financial freedom more attainable.
How It Works
New Yorkers working with a debt settlement company set up a savings account to pay off each creditor when an agreement is reached.
Pros
- Can reduce total balances by up to half
- Helps clear debts faster than traditional repayment methods
- Offers professional negotiation with creditors on your behalf
Cons
- Temporarily lowers credit score during the process
- Forgiven debt could be taxable income
Cost
Reputable debt settlement companies don’t charge upfront fees. They can only charge fees once they’ve negotiated an acceptable settlement on your behalf. Once you settle your debt, you’ll typically pay service fees ranging from 15% to 25% of your total enrolled debt.
Stats
- New Yorkers carry an average credit card debt of $8,810, with many struggling to pay higher balances at escalating interest rates.
Resources
Will debt settlement work for you? Learn more about the pros and cons of debt settlement to make an informed decision.
Bankruptcy
Bankruptcy is a last resort for New Yorkers to discharge debts and get a fresh financial start.
How It Works
Residents declaring bankruptcy must file through the bankruptcy court within their local jurisdiction. Seeking legal advice from a bankruptcy attorney may be the best way to understand your options and ask questions about the process.
Pros
- Legally eliminates or restructures qualifying debts
- Provides a financial reset when no other options remain
- Stops most collection actions and wage garnishments
Cons
- Negatively impacts credit for up to ten years
- May require selling non-exempt assets
- Legal and court fees can reach several thousand dollars
Cost
Bankruptcy payments include court costs and attorney fees, often ranging up to about $5,000. You should also plan for the cost of paying off a significant portion of your debts through a court-ordered plan.
Stats
- A total of 20,881 New Yorkers filed for bankruptcy in 2024 (PDF).
- This represents a 14% increase from the previous year.
Resources
Read a guide to help you decide whether Chapter 7 or Chapter 13 bankruptcy is the right solution.
What You Need To Know About Debt in New York
Statute of Limitations on Debt Collections in New York
The Statute of Limitations regulates how long a creditor can pursue legal action against a consumer to claim a debt. While timeframes are often similar, states set their time limits on each type of debt agreement.
The table below outlines consumer protections through New York’s Statutes of Limitation:
| Type of Debt Agreement | Length of Time Collectible |
|---|---|
| Written Contracts | 6 years |
| Promissory Notes | 6 years |
| Open-Ended Accounts | 6 years (credit cards 3 years) |
| Oral Agreements | 6 years |
Statute of Limitations on Medical Debt in New York
In 2020, up to 10% of the population in the Empire State carried medical debt in collections. For nearly 6% of residents without health insurance, medical debts can become a burden that seems impossible to overcome.
New York State’s statute of limitations on medical debt is limited to three years. This is good news for consumers amid skyrocketing healthcare costs throughout the country.
Student Loan Forgiveness in New York
New York's higher education grads owe an average of $38,690 in student loans, ranking as one of the top states in the nation for the highest federal student loan debt.
Thankfully, residents can access New York’s Education Debt Consumer Assistance Program (EDCAP). While this program doesn’t forgive debt, EDCAP helps student loan borrowers throughout the state manage their education debt with free one-on-one assistance.
Participants can also benefit from counselors who offer assistance in finding forgiveness programs or other debt relief solutions that get borrowers back on track financially.
Resources for Financial Assistance in New York
Government debt relief programs in New York include stimulus checks and tax rebates. Although stimulus checks have ended, you may still qualify for the funds if you have yet to receive them.
Other financial assistance programs for New York residents include:
- Temporary Assistance (TA): Operating under the federal TANF program, TA provides cash benefits to needy households with one or multiple minors living at home.
- NYS Child Care Assistance Program (CCAP): If you already qualify for cash assistance, the state provides various child care benefits for families in need.
- Supplemental Nutrition Assistance Program: SNAP is a federal program administered to residents through the state. SNAP provides cash assistance to help low-income individuals and families purchase healthy food.
- Public Health Insurance: New Yorkers over 65, teens, and working people with disabilities may qualify for health insurance through state and federal programs.
Get Professional Help Paying Off Your Debt
If you’re a New York resident struggling to pay off debts, TurboDebt® can help. Our debt relief program has already saved thousands of New Yorkers an average of 54% of their total debts.
Find thousands of 5-star TurboDebt reviews on Trustpilot and Google from clients who’ve already finished their journey to financial freedom.
Contact us today for a free consultation to see if you qualify for proven debt relief services. It only takes a few moments to start down your own path to debt-free living.