Texas Debt Relief: What to Know

In a Nutshell

Finding debt relief in Texas might seem daunting, but with help from TurboDebt, our information and resources below make it manageable. We understand that unsecured debt requires choices for relief, especially in Texas, which recently landed in second place for the amount of credit card debt among residents, including an average household credit card debt of $8,681 in 2022. This article contains Texas debt relief information, including debt statistics, options for relief, resources, and answers to common debt relief questions.

The Lone Star State: An Economic Picture

You know what they say about Texas: everything is bigger. It is the second most populated state in the US. It’s also one of the most popular states for people to seek residence because of its low cost of living and freedom of income tax. The Lone Star State may sound like a dream come true when it comes to the cost of living, but the amount of debt Texans have racked up is definitely one of the “big” parts of the state.

For example, according to a recent Credit Card Debt Study, Texas took second place in the amount of credit card debt among residents, with an average household credit card debt of $8,681 in 2022. Because of this accrued credit card debt, along with missed credit card payments and falling behind on bill payments, Texas has one of the lowest credit scores in the US. Some of Texas's worst areas for credit card debt in Texas include San Antonio and Dallas.

The large amounts of consumer debt in Texas can be due to the low cost of living and access to multiple low-cost services. While it is cheap to live in Texas, debts can add up fast and put consumers in financial trouble.

Debt Relief: How Does it Work in Texas?

Debt relief is the process of relieving an individual, a family, or a group of their debts or money owed to debt collection companies. This can be from credit cards, medical bills, mortgage payments, unsecured debt, personal loans, etc. Finding the right debt relief option for Texas state residents requires a lot of research on what options there are.

Debt Relief Companies

A debt relief company, or a debt settlement company, is usually a nonprofit company claiming they can negotiate with lenders, called debt negotiation, to change, reduce, or settle a person’s debts.

Debt relief companies will often negotiate with lenders to let those in debt pay a “settlement,” which is a sum of money that is less than the total amount the person owes. They will ask you to put away a certain amount from your monthly paycheck into an account until the amount accumulated reaches the settlement amount. These programs will also ask the person in debt to stop making monthly payments to lenders.

What TurboDebt Does

At TurboDebt, we use strategic planning, advising, and consulting to help you find a program that will meet your financial needs. Debt relief is different for everyone, so we will work with you to find debt solutions that fit your financial situation.

Texas Consumer Debt Statistics

Average Consumer Debt

Texas consumers, combining the average amount of debt for auto loans, student loans, mortgages, and credit cards, have an average consumer debt of about $233,194.

Credit Card Debt

A Texas resident's average credit card balance Texas resident in 2022 was reported at $6,753, which is higher than the national average of $6,194 reported in 2019.

Auto Loan Debt

According to New York Fed Consumer Credit Panel, Texas has the highest auto loan debt in the US at $7,270 and carries the highest auto loan debt in the US. This is much higher than the national auto loan debt of $5,210.

Mortgage Debt

The average mortgage debt among homeowners in Texas stands at $201,084, while the typical home in Texas is worth $200,400. Texas is one of 23 states where the mortgage debt exceeds $200,000.

Student Loan Debt

The median student loan debt in Texas sits at $18,087. Texas's average monthly student loan payment average monthly student loan payment in Texas is $143 as of 2022.

Household Debt

Texas’s average household debt in 2019 Texas was $45,290.

Bankruptcy

According to the American Bankruptcy Institute, in 2021, there were a total of 19,762 filings for bankruptcy in Texas total. There were 12,461 cases filed for Chapter 7 bankruptcy, 828 for Chapter 11, 6,415 for Chapter 13, and 58 filings for other bankruptcy cases.

Average Income and Employment

The median household income in Texas, in 2020 sits at $63,826. That same year, there were 12,676,781 people in the workforce.

Credit Scores

Texas was ranked number four in the top ten states with the lowest credit scores in 2020, with an average credit score of 688.

A good credit score is considered to be between 670 to 739, so Texas does not fall low on the credit score scale.

Identity Theft

In 2021, there were a total of 146,095 cases of identity theft in Texas logged by the FTC. All told, fraud and scams in Texas, including identity theft, resulted in a loss of $369.4 million in the Lone Star State.

Banking and Tax Information

Texas currently imposes a 6.25% sales and use tax on taxable services, retail sales, rentals, and leases. Texas does not have an individual or corporate income tax, but it does have a gross receipts tax.

Texas’s local sales tax rate Texas is 2.00%, which makes the combined state and local sales tax rate 8.2%.

In 2019, it was reported that 10.4 million households were unbanked in Texas. 29.1% of those households reported being unbanked because they did not have enough funds to meet the minimum balance requirements.

How TurboDebt Has Helped Texas Residents with Debt Relief

The total amount of Texas client debt enrolled through our company reached $76,162,211 in 2022, with the average debt enrolled per client being around $22,420. Here at TurboDebt, we have helped a total of 10,358 Texas clients, of which 3,397 people have enrolled into our own debt relief program.

Top Types of Debt to get Relief From

Credit Card

Texas credit card debt relief is one type of relief that TurboDebt offers. Credit card debt is one of the most common and daunting types of debt, with the collective total in America being $900 billion.

If you are in Texas and struggling to pay off your credit card, our team will help you find relief options in your state and assist you toward a debt-free life.

Divorce Debt

Having debt and money problems is one of the top reasons marriages end in divorce. The cost of getting a divorce can make your financial situation even worse.

Getting a divorce can cost each person an average of $15,000 and can be raised up to $100,000 in more complicated situations.

TurboDebt can enroll you into a Texas-specific specific divorce debt relief program if you are struggling in this area of your finances. We can help you settle your divorce payments in Texas by finding a relief program right for you.

Business Debt

The average small business owner has roughly $195,000 in business debt. The general rule of thumb is to keep your business debt within 30% of your business capital. Exceeding this number can lower your business credit score and give the impression to lenders that you are irresponsible with your business’s funds.

In Texas, business debt relief programs can help you lower your percentage and help your business thrive again.

Medical Debt

Medical debt is another daunting debt to have to settle. 41% of adults have healthcare debt, which is 100 million people, ranging from under $500 to over $10,000.

Settling your medical debt is tough, especially when you need to have expensive treatments or surgeries to live. However, TurboDebt can connect you with medical debt relief programs in Texas that can help you towards a medical debt-free life.

Homeowner Debt

Mortgage debt is the largest form of debt for most Americans. The average mortgage balance for Americans is $220,380, and the amount has risen 5.9% from 2020 to 2021.

At TurboDebt, we offer support so Texas homeowners can find mortgage debt relief programs that will work best for their homeownership needs.

Retirement Debt

Since most of those who have retired have little to no savings, debt can follow them even after retirement.

30% of retirees reported having nothing in their retirement savings accounts.

Luckily, here at TurboDebt, we can help even those who are no longer in the workforce settle their debts and live the rest of their lives debt-free.

Options for Debt Relief in Texas

Debt Management Programs

A debt management plan is a debt relief option that combines all your current debts into one monthly payment with a reduced interest rate. This can work for those that have a steady income and can make those monthly payments over the course of, on average, three to five years.

This option can also work for people who need assistance with managing and budgeting their money since it creates a payment plan that works within their income and other financial obligations.

For example: If you have a combined balance of $14,000 on your credit cards, and you split that payment over five years, that’s 60 monthly payments. Each monthly payment would be about $233.33 before interest. Including interest, it would depend on the bank the card is under. You can also negotiate a lower interest rate with lenders.

Let’s say you negotiate down to an interest rate of 8%. If your balance on one card is 3,000, then the interest is $240. You divide that by 12 months, which is $20. Add that to the credit card balance divided over 60 months, which is $50, and 50+12= $62. That would be your monthly payment on one card. If you have multiple credit cards from different card companies, you can use this calculation to figure out your payments on those as well.

You can also figure out your monthly payments on your other debts while negotiating lower interest rates.

Debt Consolidation Loans

Instead of a monthly payment plan, debt consolidation loans are loans you take out to repay your debts. You will take out one loan to pay off your other loans, basically, and then repay that loan over a period of time, including interest. Debt consolidation loans may require an upfront payment as well.

You can calculate your monthly interest and payment rate as seen in the previous section. However, it will be based on the loan amount taken out and not the remaining balances of your debts.

However, lenders may only offer low-interest rates on your payments as “teaser rates” and can change to high-interest rates later. You are also paying for a longer time overall.

Debt Settlement

Debt settlement is the process in which the borrower negotiates with the debt collectors to let them repay a certain amount of the money owed and forgive the rest of the debt.

You may need a decent amount of money to settle your debt, and there is always the potential for scammers that promise they can forgive your debt after you pay them.

Debt settlement programs will usually require that you pay 15-25% of the remaining balance as the minimum payment. For example, if you have a remaining balance of $10,000 on a loan, and the debt settlement program’s fee is 18%, you will have to pay $1,800.

Credit Counseling

Credit counseling involves working with a credit counseling agency to help develop a personalized plan to solve your financial struggles.

You will usually be working with actual people, called credit counselors, who are certified and trained in areas such as consumer credit, budgeting, and debt management. These people will advise you on how to create a budget and plan to pay off your debts, offer free financial education, and help you get copies of your credit reports.

Bankruptcy

Filing for bankruptcy is another option for debt relief. If you are struggling to pay off debts, you can pay them off by either liquidating your assets or creating a repayment plan.

You can file a petition with a bankruptcy court to start, and all cases are held in federal courts outlined in the U.S. Bankruptcy Code.

There are different types of bankruptcy you can file for, depending if it’s just for an individual, a family, a business, a city, or another. For example, individuals can file for Chapter 7 or Chapter 13 bankruptcy, while businesses can file for Chapter 7 to liquidate their assets or Chapter 11 to reorganize them.

Debt Forgiveness

Debt forgiveness happens when a lender forgives all or some of a borrower’s balance on their loan or credit.

Most types of debt can be forgiven, such as student loan, medical, credit card, mortgage, and tax debt. Usually, borrowers must qualify for a special program to be considered for debt forgiveness.

Debt and Financial Hardship Resources in Texas

Texas Temporary Assistance Programs

Temporary Assistance for Needy Families (TANF)- a program through the United States Department of Health and Human Services that provides cash payments to families for food, clothes, housing, and other living essentials.

Repatriation Program- provides qualified U.S. citizens and their dependents temporary assistance, in the form of a loan, that have traveled from a foreign country that is suffering an event that has made resources scarce, such as a pandemic or war.

State Health and Human Services

Loan Star Card- Electronic Benefit Transfer (EBT) card for Texas residents that provides food and cash assistance through programs such as TANF and the Supplemental Nutritional Assistance Program.

Feeding Texas- the largest hunger relief organization in Texas that provides food and resources from food banks.

Supplemental Nutritional Assistance Program (SNAP)- helps people purchase food and garden seeds to plant food that has nutritional value.

Child Care

Texas Rising Star- voluntary quality rating and improvement system (QRIS) program that works with childcare programs in Texas and parents who want to find high-quality childcare facilities. Texas Rising Start works with childcare programs in the Texas Workforce Commission (TWC) and helps parents through their Texas Child Care Availability Portal find early learning programs with available spots.

Child Care Services (CCS)- a program under the TWC that provides financial aid to families in need of childcare that meet income requirements. Parents can choose from licensed child care centers, registered or licensed childcare homes, or relatives that are 18 years of age or older.

Shelters for the Homeless

Permanent Supportive Housing Program- helps those who are 18 or older find safe, affordable housing and learn skills needed to live independently.

Supported Housing Rental Assistance Program- help those that are homeless or at risk of homelessness with temporary rent, utility, and move-in costs.

Projects in Assistance in Transition from Homelessness- help those with mental illness or struggling with substance abuse and their families recover from homelessness.

Homeless Housing and Services Program (HHSP)- provides funding to the nine largest cities in Texas to support those who are homeless or at risk of homelessness. Activities included are construction, development, and procuring of housing in the cities included, which are Arlington, Austin, Corpus Christi, Dallas, El Paso, Fort Worth, Houston, Plano, and San Antonio.

Free Transportation Services

Medical Transportation Program- provides transportation to qualified individuals to the doctor’s office, dentist’s office, hospital, drug store, or other medical buildings that provide covered health care services.

American Public Transportation Association- provides links to transit agencies for cities, towns, and counties within the U.S. You can find bus, train, and ferry services.

Senior Ride Programs- provides transportation for senior citizens who cannot transport themselves or go with a friend or family member.

A Debt-Free Life in Texas can be Yours

A debt-free life can be yours. It takes strategic planning, consultation, and negotiation, but your finances can be back in your control before you know it. Now that you know about debt relief options and resources in your state, it should help you feel more comfortable and confident about taking back control of your financial situation.

While considering your debt-relief options, make sure to beware of debt relief scams. Those in debt are near the top of the list for scammers. If something seems too good to be true, it probably is.

Also, remember to practice due diligence in your debt-relief journey. Debt relief is a process that must be taken seriously and correctly to get you back in control of your finances.

TurboDebt is here to help you every step of the way toward a debt-free life. Take the first step forward by booking a free debt relief consultation, and let us help you find the right debt relief option for you.