Before learning more about Texas debt relief, it is important to know a few facts about the state’s debt problem. Despite carrying less debt than the average American, at about $13,500, Texans have among the lowest credit scores in the country. In addition, the state has one of the highest rates of identity theft in the country as well. Several statistics indicate why Texans may have lower credit ratings and higher identity theft instances. (debt.org/faqs/americans-in-debt/consumer-texas/)
Texas Debt Statistics
The following statistics give some insight into the Texas debt picture, as well as the reasons consumers may want to investigate debt relief in the state:
- Unemployment Rate: As of August 2013, Texas had an unemployment rate of 6.4 percent, compared to the national rate of 7.3 percent. (http://www.bls.gov/lau/) (data.bls.gov/timeseries/LNS14000000)
- Poverty Level: The poverty rate in Texas declined between 2011 and 2012, from 18.5 percent to 17.9 percent, using the federal guidelines that a family of four making less than $23,492 is living below the poverty level. Despite the drop, Texas poverty rates are still higher than the national average of 15.9 percent. (smmercury.com/2013/09/23/poverty-rate-declines-for-first-time-since-recession/
- Student Loan Debt: Texas ranks 40th in the amount of student loan debt, with an average of $22,140, while it ranks 29th among states based on the proportion of students who carry debt. According to the Project on Student Debt, 59 percent of Texas students have student loan debt. (projectonstudentdebt.org/state_by_state-data.php)
- Credit Card Debt: Three Texas cities ran in the top ten for consumers with the highest credit card debt. San Antonio ranks first with $5,177 in average consumer debt, while Dallas, with $4,936 ranks fifth. Austin comes in eighth with $4,791. (money.cnn.com/2011/03/04/pf/cities_credit_card_debt/index.htm#anchor)
- Bankruptcy: Bankruptcy filings in Texas dropped in all three federal judicial districts in the state. The Northern District saw a decline of 2.4 percent, while the Western District saw a decline of 8.4 percent. The Southern District had the biggest drop with 11.4 percent fewer filings between 2011 and 2012. (http://www.uscourts.gov/statistics/bankruptcystatistics/interactive-map.aspx)
All of these statistics show that Texas consumers need the option of Texas Debt Relief as the state has higher than the national average credit card debt, families living in poverty and a high number of students leaving college with student loan debt.
Debt Consolidation Texas
In Texas, debt consolidation allows the consumer to combine all credit into one monthly payment. Often, the credit counselors work with creditors through the consolidation process to lower interest rates in order to keep the consolidated monthly payments affordable. This means payments become more manageable and allow the consumer to have more disposable income for savings or retirement. There is also a reduced risk of credit damaging late payments, as well as the late fees that come with them, due to “forgetting” one of the many different debt payments the consumer is dealing with without debt consolidation. For many consumers, debt consolidation Texas programs offer a simple, easy solution to managing debt. (money/howstuffworks.com/personal-finance/debt-management/debt-consolidation1.htm)
Debt Settlement Texas
Debt settlement in Texas is different from debt consolidation. Also known as debt arbitration or debt negotiation, the practice involves negotiating with creditors to accept a lower balance that the creditor accepts as a balance paid in full. Although the practice may result in a lower credit score temporarily, the debtor pays off the balance sooner at less than what is owed. Debt settlement often helps consumers avoid bankruptcy.
A debt settlement program includes only one monthly payment for each client. That payment is deposited into a trust account. As money accumulates in the trust account, one by one each creditor is settled and paid, until a person is debt free. Creditors are not paid on a monthly basis, like with consolidation services, but rather paid in lump sum payments. Fees and settlement funds are all included in the monthly payment.
At Golden Financial Services, their servicing negotiators will often lump together hundreds of client’s worth of debts at a given time when negotiating. This creates leverage that allows our negotiators to solidify larger savings for each client.
Golden Financial Services pays their debt negotiators the settlement fee, when each debt is settled.
All of this information is clearly disclosed verbally to each client on their first consultation, on the client agreement that every client must sign prior to them being approved on the program and on the compliance call that every client must complete before they are approved on the program.
Once the negotiators have reached an agreement with each creditor, the money in escrow is sent to the creditor, and the balance is considered paid. Each creditor varies in what percentage deduction they will accept as debt settlement, which is why it is critical to work with a qualified debt settlement company in order to achieve the best results.
Student Loan Debt Relief in Texas
Because student loans are normally federally insured loans, they may not be eligible for debt consolidation or debt settlement Texas programs. However, in an effort to encourage employment and help consumers with the rising cost of post-secondary education, the government offers several options to help students manage student loan debt. Plans include:
- Income Contingent Repayment Plan – For Federal Direct Loans, but not PLUS loans. Payments are based on income, and may be as low as $5 or nothing. If the loan is not paid in full within 25 years, the government cancels the remaining balance.
- Income Sensitive Repayment Plan – For FFEL loans. Payments are based on annual income, family size and the amount of the loan. However, payments must cover interest that accrues on the loan, and it must be paid in full within ten years.
- Income Based Repayment Plan – For both Direct and FFEL loans, but borrower may not be in default to qualify. This plan offers more flexibility, and debt is eliminated after 25 years of payments.
- Hardship Repayment Plans for Perkins Loans – Perkins Loans require repayment of at least $40 per month, but repayment may be extended for an additional ten years due to prolonged unemployment or illness.
For students without financial hardship, there are still options available, including graduated payment plans, longer repayment terms, or consolidation of student loans into one monthly payment. Golden Financial Services offers a program that helps students with getting signed up on the right student loan debt relief program, in order to have the lowest monthly payment.
For Texas consumers struggling with debt, learning more about Texas debt settlement or debt consolidation can reduce stress, eliminate the collection calls and help them get a fresh start toward financial freedom. This easy-to-use debt calculator can help you review all options available to you.
For more information, fill out the simple contact form above or contact us by phone today at 866-376-9846.