Washington, DC Debt Relief: All You Need to Know
15 MIN READ
Published April 17, 2023 | Updated May 04, 2023
In a Nutshell
Financial hardship can strike anyone. No person is immune from the negative impact of critical debt, even in the District of Columbia. Fortunately, for the residents of our nation’s capital, debt relief can be found in the form of credit counseling, debt settlement, debt management, and other key strategies for relief. When unsecured debt appears overwhelming, D.C. residents know they can turn to TurboDebt to help improve their financial situation.
In 2022 alone, we saved clients an average of 45.27% on their total debt enrolled in our program before fees. Read on to learn more about the debt relief programs available in the state, key financial hardship resources, and answers to common questions about debt relief in Washington, D.C..
Washington, DC Debt Relief: tl;dr
As the capital city and the United States federal district, Washington DC is a bustling political metropolis filled with law firms and a major population center. The District of Columbia borders both the states of Virginia and Maryland, whilst the city also sits on the east bank of the famous Potomac River. In 2020, DC possessed the country’s 4th largest economy and, for many years, has had a GDP (per capita) ranked in the top few states in the entire nation.
As of July 2022, 25% of Washington, D.C.’s population are federal gov workers. It also has a very low unemployment rate, which was 3.1% in the same period of time. As of 2019, DC residents enjoyed the highest median household income in the U.S. at $92,266 and a relatively high credit score average of 716.
How Does Debt Relief Work in Washington, DC?
Debt relief works by helping an individual, family, or group of people become free from their debts owed to various lenders or collection companies. This may be in the form of credit card debt, medical debt, mortgage repayments, finalizing unsecured debt, or any other type of personal loan. Finding the right debt relief option or credit counselor in the D.C. area requires researching the options available and if they suit your unique financial situation.
Some of the most aggressive debt relief options involves a negotiation with lenders that allow for reduced payment terms or totals. This service is often offered by third-party, nonprofit organizations and for profit debt relief companies that aim to reduce debt by working on a person’s behalf. TurboDebt is a trusted option for those searching for debt relief in Washington DC, and offers a transparent approach to each individual’s person finance situation.
Washington, DC Debt and Finance Statistics
Based on our research, the statistics and information below are some of the most impactful when it comes to understand debt and the financial state of Washington DC.
Average consumer debt
The average DC resident, despite possessing a better financial situation when compared to much of the rest of the country, has $162,905 of debt on average. This reflects all outstanding loans, including auto, student, mortgage, and credit card debt.
Credit Card Debt
D.C. residents' average credit card debt in 2022 was $6,904, which is up 16% from the previous year, and over the national average of $5,910.
Auto Loan debt
According to the most recent State Level Household Debt Statistics from the Federal Reserve Bank of New York (Q4 2022), DC residents, on average, have the lowest auto loan debts in the United States at $3,740. This is under half of the highest in the nation, which is Texas at $7,610.
Due to the high earning potential of DC residents and low inventory, housing prices in the nation’s capital can be amongst the highest in the nation, but the average mortgage debt among homeowners in Washington, DC, stood at only $67,370 in 2020. 41.6% of Washington, DC residents can call themselves homeowners and have a monthly median mortgage repayment of $1,784.
Student Loan debt
In 2020, the median student loan debt for DC residents was $13,600. Student loan payments are one of the most common types of debt affecting young people in the state as they seek employment that matches their talents and meets their financial needs.
Washington DC’s residents’ average total household debt in 2020 was $89,921. This figure is rising across the country, and tends to make up the most common type of debt that individuals have.
There were 251 total filings for bankruptcy in 2022. One hundred ninety of those filings were for Chapter 7, 19 were for Chapter 11, and the remaining 42 were for Chapter 13.
Average Income and Employment
Washington, DC, is not a “right-to-work” district, so unions hold much sway there. Residents enjoy very competitive pay and, on average, earn $56,147. The average median household income is quite high, also at $86,420, whilst minimum wage jobs are able to earn as high as $15.20 per hour.
With an average credit score of 717 in 2022, DC residents have one of the highest average scores in the nation. This is in comparison to the lowest in the nation, which was Mississippi (681), and the highest in the nation, which was Minnesota (742)
DC residents experienced 418 cases of identity theft per 100,000 residents. In total, there were 2,932 cases reported. This placed DC residents as the 5th highest state where identity fraud occurred last year.
Banking and Tax Info
Residents of DC enjoy a sales tax of 6%, which is quite low compared to the rest of the country. Their income taxes range from 4%-8.95% also. The people of Washington, DC, are less likely to bank than other Americans. The percentage of “unbanked residents,” those without checking or savings accounts, stands at 8%.
How TurboDebt Helped Washing DC Get Relief in 2022
TurboDebt enrolled 61 people in 2022 into a debt relief program, whilst 186 residents spoke with us for a free consultation. The average debt of an enrolled client was $28,133, and before fees kicked in, we saved them an amazing 45.27% on average on what they owed. In total, we had an enrolled debt of $1,716,127 in 2022.
Top Types of Debt to Get Relief from in Washington, DC
While there are many types of debt that residents may need help with, last year based on our work, we saw the following forms of unsecured debt enroll in our debt relief program most often.
Credit Card Debt
If you live in the nation’s capital, credit card debt relief is just a phone call away with TurboDebt. Credit card debt is, unfortunately, very common these days and a leading cause of stress for many Americans. It’s important to know that you aren’t alone in this battle, as the total debt in the US begins to exceed the $1 trillion mark.
TurboDebt will be there to help you find relief options in Washington, DC, and get you back on the path to financial freedom.
One of the chief reasons couples divorce in the United States is money problems. Meanwhile, the fees for seeking legal advice during divorce often worsen both parties' financial situation.
It is estimated that the average divorce can cost each person up to $15,000 on average and can skyrocket to $100,000 in more complex proceedings.
TurboDebt knows the divorce landscape well in Washington, DC, and has debt relief programs available if you are struggling with the financial side of divorce.
American small businesses had an average of $195,000 in debt. This number may be crippling to many small businesses across the country when you consider that most economic experts agree that only a third of a business’s capital should be tied up in debt. Going above this threshold will lower your credit score and deter lenders from loaning you money, which is crucial for expanding.
If this threshold sounds too close for comfort with your business, then you should call TurboDebt. We can get you started on a business debt relief program as soon as possible.
The Kaiser Family Foundation estimates that 9% of adults, or around 23 million Americans, owe more than $250 in health costs. But, over 11 million of those people reported having over $2,000 in medical debt; a portion of that, around 1% of Americans, reported a crushing $10,000 or more in medical debt. While that may not sound too daunting, when medical debt strikes, it can make your situation much worse.
And a health situation can strike at any time. So, when it does, and medical debts start to pile up, DC residents should turn to TurboDebt, which will help with specifically designed debt relief programs on medical debt.
Data from Experian says that, on average, DC residents have an average mortgage balance of $492,745. Figures like this prove that mortgage debt is the largest debt most Americans will ever have.
TurboDebt will be there to help DC residents when times are tough or when mortgage repayments are getting too large to make. We’ll find a debt relief program that will keep your home in your hands.
Retirement should be a time of happiness, less stress, and not having to think about things like money and work. But the fact is that so many Americans continue to face financial stress well into their golden years. At TurboDebt, we can ensure you have a happy retirement and don’t end up in the same situation some 30% of American retirees face: having little to no money set aside when their retirement day rolls around.
Options for Debt Relief in Washington, DC
When deciding on a debt relief option in Washington, DC, we recommend the following top choices, which have varying levels of aggressiveness when it comes to tackling different debt amounts.
Debt Management Programs
Debt management plans can encompass several different strategies for paying off debt. The most common debt management programs tend to be relief options that combine all existing debts into a single monthly payment at a reduced interest rate. This is a good option for people with a reliable income stream who can make monthly payments (on time) over the course of three to five years (on average).
Debt management plans are great for people needing assistance managing and budgeting their income since they create a strict repayment plan guided by their income and other financial commitments.
For example, if you have a combined balance of $20,000 on your credit cards and split that payment over five years (60 monthly payments), each payment would be around $333.33 before interest. With interest included, that figure would obviously increase, depending on the terms of your current lender. Borrowers may also be able to negotiate a lower interest rate with a lender.
Having said this, let’s say you negotiate your interest rate down to 9%. If the balance on one credit card is $4,000, then the interest is $360. Then we split that over 12 months, which is $30. We then add that to the credit card balance over the next 60 months. This would determine your monthly payment on just one credit card. If you have multiple credit cards, you would also use this method to calculate your payments on those.
Debt Consolidation Loans
Sometimes, instead of devising a monthly payment plan, debt consolidation loans can be taken out to repay debts. This involves a single loan covering all other debts, which is then repaid over a set period of time. Interest is also included in this figure. Debt consolidation loans will often require an upfront payment to begin with.
As the previous section shows, you can calculate your monthly interest and payment rate. Just to remind you, though, this number is based on the loan amount taken out, not the remaining balances of other debts.
However, many lenders like to offer low-interest rates on these payments as a “teaser rate” but will change to a higher interest rate later. This also means payments back take longer.
Debt settlement is when a borrower negotiates with a debt collector to repay a sum of money owed whilst having the rest of the debt forgiven, often by up to about 50%.
A borrower will likely need a sizable sum of money to complete this process, or be able to commit to a revised payment program lasting anywhere from 2-4 years on avberage.
Debt settlement programs typically require 15-25% of the remaining balance for a minimum repayment. So, if you have a remaining balance of $20,000 on a loan, and the debt settlement program’s fee is 15%, you will have to pay them $3,000 to start with.
Credit counseling may take place with the help of a credit counseling agency to develop a personalized plan to reach financial freedom.
A candidate will work with a credit counselor. These people are certified and trained in dealing with consumer credit, budgeting, and debt management plans. These counselors also give advice on how to create a budget and plan to become debt free through free financial education and helping you obtain copies of your credit reports.
A bankruptcy filing is another solution for people seeking debt relief. Some elect to liquidate their assets or create a repayment plan if debt repayment overwhelms them.
A bankruptcy court must first receive a petition. This is a federal court as outlined in U.S. Bankruptcy Code.
There are different types of bankruptcy someone can file for. For example, an individual may file for Chapter 7 or Chapter 13 bankruptcy, while businesses may file for Chapter 7 to liquidate assets or for Chapter 11 to restructure them.
Debt forgiveness occurs when a lender ‘forgives’ all or a portion of a borrower’s remaining balance on their loan or credit.
Generally, most debt is forgivable, including student loans, medical bills, credit card debt, mortgage, and tax debt. In most cases, the borrower must qualify for a special debt resolution program to be granted debt forgiveness.
Debt and Financial Hardship Resources in Washington, DC
Temporary Assistance Programs
The Capital Area Food Bank is a great organization that helps DC residents receive regular food deliveries, especially if they also have families in their care.
State Health and Human Services
The Health and Human Services for Washington DC have a number of resources under its banner that can assist local residents.
Families receiving Temporary Assistance for Needy Families (TANF), teen parents seeking their high school diploma, and other parents pursuing education to improve their employment opportunities and prospects may qualify for a subsidized childcare program organized by the DC DHS. When qualifying for this program, needs, income, and family size are all considered.
The Office of the State Superintendent of Education also has a voucher program to help with child care.
Shelters for the Homeless
The DC Department of Human Services assists families, individuals, veterans, and young people facing homelessness or needing immediate rental assistance. They provide outreach, emergency shelter, and day centers, as well as a variety of other vital housing programs.
Free Transportation Services
In December 2022, the nation’s capital voted to waive fares for all Metrobus rides within the city limits beginning July 1, 2023. This was the first initiative in the nation to offer free public transit (In a major city).
Conclusion on Achieving Debt Relief in Washington DC
If you live in the D.C. area and need help with debt relief or are looking for a free consultation, call TurboDebt today. We have helped thousands of folks escape crippling debt and achieve financial freedom.
Conducting due diligence when pursuing debt relief options is important, and TurboDebt can help you do that. Contact us now for a free debt consultation and to learn about enrollment options that aren’t another loan or bankruptcy.