With the COVID-19 restrictions seemingly behind us now, consumer debt is on the ascent, which might necessitate relief strategies such as debt consolidation in Tampa. The pandemic certainly played a significant role in seeing consumer debt, particularly credit card debt, plummet in Florida. During the shutdowns, credit card utilization went down, and most consumers were diligent in paying down their credit cards. But how are credit cardholders doing now in the Sunshine State, and particularly, Tampa?
Consumer Debt in Tampa, Florida
Apart from student loans, mortgages, and auto loans, credit card debts account for a significant portion of household debt in the U.S. Towards the end of 2021, consumers added a staggering $74.1 billion in credit card debt – a worrying upsurge, given that the average yearly increase in credit card debt over the last ten years was $48.5 billion.
In the same year, Tampa residents had a total credit card debt of $1.75 billion, which marked a decrease of about $237.5 million from the previous year. The household credit card debt in the city was $11,483, which was a drop by about $1,559 from the previous year.
With most restrictions now lifted in Florida, consumers have a reason to go out and spend money. However, not all are handling the comeback spending spree properly. While it is understandable that consumer enthusiasm is high, some consumers are spending money they might not have and wholly relying on their credit cards.
Such consumers may soon struggle to pay off their credit card debts and other unsecured debts. 12% of Florida credit cardholders were delinquent in payments, and 6.1% of them have maxed out cards – the tell-tale signs that they may soon be struggling to get out of debt. Below, we look at the various effective legal debt solutions consumers could turn to for debt relief.
Common Debt Relief Options in Tampa
While the year-to-year debt-to-income (DTI) numbers are hard to come by, the rise in debt levels compared to incomes suggests that Americans now have higher DTI ratios. Consumers who struggle to pay down their debts often turn to debt relief options such as bankruptcy.
Bankruptcy is a viable option for consumers who can’t pay off their debts. While it gives you a ‘fresh start,’ it remains on your credit report for seven or ten years, depending on the type of bankruptcy filed. What’s more, only consumers who qualify through the means test are eligible for bankruptcy. Worse yet, you’ll have to wait between four to eight years before filing for bankruptcy again.
Seeking Relief Through Debt Consolidation in Tampa
If you are ineligible for bankruptcy and can still pay off your unsecured debts, you can do so by consolidating. Debt consolidation means reorganizing your debts into a single monthly payment which ensures timely payments. Additionally, consolidating debt potentially reduces the interest on your existing debt.
Debt consolidation Tampa FL is helpful and available to consumers who owe manageable debt and have good credit. This way, they can access low-interest consolidation loans and save hugely over the payment period. While debt consolidation in Tampa is an easy, DIY method of paying off your consumer debts, most consumers still ask: is debt consolidation a good option?
Below, we discuss some of the ways through which Tampa residents can consolidate and pay off their unsecured consumer debts.
Debt Consolidation Loans
If you have good credit, reliable income, and are looking to pay off all your creditors, getting a consolidation loan could be the best way to achieve debt relief. Consolidation loans can be personal loans borrowed from banks, credit unions, and online lenders. Individuals with good to excellent credit often qualify for these loans at a low interest.
Personal loans also come in handy in credit card consolidation as they carry relatively lower interest rates compared to credit cards. Credit cardholders juggling multiple monthly payments can consolidate their credit card debts and pay them off through a personal loan. This leaves them with one, lower-cost monthly payment on the personal loan.
Credit Card Balance Transfer
A credit cardholder can also consolidate their credit card debts without taking out a credit card consolidation loan. Balance transfers involve moving multiple credit card debts into a single, lower-interest card and making payments on that credit card. A balance transfer potentially lowers the interest on the outstanding debt. It also helps credit cardholders focus on a single monthly payment.
Most balance transfer credit cards are offered at 0% interest for an introductory period. As such, individuals who qualify for a balance transfer can pay off their credit cards interest-free if they make all payments before the introductory period elapses.
Before doing a credit card balance transfer, be sure to find out the costs that accrue. If the cost of doing a balance transfer is greater than the possible savings on interest, then you’re better off using other options for debt consolidation in Tampa.
Debt Management Plan (DMP)
Unlike the other options for debt consolidation in Tampa, enrolling in a debt management program doesn’t require you to take out a loan to solve your credit woes. A debt management plan is a debt payoff tool that puts you on a path to settle all your debts – typically high-interest, unsecured debts – over several years.
Nonprofit credit counseling agencies offer debt management plans, usually at a fee. A dedicated financial counselor will assess your financial situation to establish whether a debt management plan is appropriate. If not, the counselor will lay out other available options that can put you on the road to becoming debt-free.
If your unsecured debt is below 40% of your annual income, you might be a candidate for a debt management plan. A DMP is also a good option if you have a steady income that could enable you to settle all your unsecured debt within five years. Individuals who can cope without opening new lines of credit once they enter into a program can also consolidate their debt through a DMP.
By signing up for DMP, your credit counselor negotiates with your creditors to reduce the interest on your existing debts. You will then make a monthly payment directly to the nonprofit agency who in turn sends the money to your creditors. By honoring your agreement and seeing the plan through, you may reestablish your credit, in addition to becoming debt-free.
If your debt is less than what would necessitate filing for bankruptcy, you could look the way of debt consolidation. With consolidated debt, you are likely to save on interest charges, and you’ll be required to make a single monthly payment. Besides potential savings, debt consolidation in Tampa can help become debt-free in three to five years and help you reestablish your credit.