Whenever you feel overwhelmed by the debts you owe, debt consolidation in Orlando could be one of the debt relief options you could consider. While not all debt may be consolidated, Orlando residents can rely upon consolidation to put most of their unsecured debts behind them. In this post, discuss consumer debt in Orlando and feasible ways for residents to achieve debt relief.
Consumer Debt in Florida
During the recent tough economic times, residents of the Sunshine State did a commendable job of keeping debt levels in check. Even with the return to normalcy, there are still some worrying numbers coming out of Florida in the past year.
At the end of 2021, Florida ranked second in the country in bankruptcies and foreclosures. A staggering 13,595 Floridians filed for bankruptcy that year, with only California registering more bankruptcies. The number of foreclosures also pointed to the residents’ debt struggles. With 2,972 foreclosures that year, only Illinois recorded more.
While these numbers may not be a true reflection of the state’s consumer debt situation, it would help to look at credit card debt. The average Floridian carried $7,049 in credit card debt – only six states had higher numbers that year. Perhaps eager to get back to their spending ways, Floridians recorded a higher utilization rate on their credit cards than the national average.
Utilization rate is a comparison of your balance and available credit and is an important consideration when it comes to your FICO credit score. A higher utilization rate will likely lower your credit score, which isn’t desirable.
Credit Card Debt in Orlando, Florida
Among Florida’s ten largest metropolitan areas, Orlando has the 5th highest credit card debt, with the average cardholder owing $6,965. Considering delinquency rates, 7.4% of Orlando cardholders are likely to be 30 days late with their credit card payment.
With the average Orlando cardholder carrying six credit cards and recording a utilization rate of about 40.6%, it isn’t difficult to tell why they have among the highest credit card debt in the state.
What’s more, 6.8% of cardholders in Orlando have a maxed-out credit card, which could hurt their credit scores and cost them more in interest if balances aren’t paid off immediately.
In 2021, the average household credit card debt in Orlando was $9,791 – a significant drop from the previous year.
Orlando, Florida Debt Relief Programs
Residents struggling with debt can explore various options to achieve debt relief. While there could be various debt relief programs for Orlando residents, it is advisable to choose one that best suits your situation. Below, we look at some of the ways through which Florida debt relief can be achieved.
Debt Consolidation in Orlando
Consolidating our unsecured debts means bundling them into a single, monthly payment. You can then choose one of the several Florida debt consolidation options to help you pay off your debts. Read on to find out the most common consolidation options in Orlando, Florida.
Debt Consolidation Loans
A debt consolidation loan could be a personal loan from a bank, online lender, or credit union. You could also borrow from your family or friends and repay your debts. Using a loan for debt consolidation in Orlando Florida is particularly important if you have multiple, high-interest debts.
With a good or excellent credit score, lenders will likely offer their best terms, including low interest on the borrowed amount. This way, you can repay all your debts and focus on a single, low-interest monthly bill. A loan for debt consolidation in Orlando is also useful for settling credit card debts, which often carry high-interest rates.
If you’re a homeowner, debt consolidation Orlando can also be achieved by taking out a home equity loan or HELOC. Using the equity in your home as collateral, you can get a low-interest loan or line of credit from which you can draw up to a certain limit. Such Home equity loans and HELOCs often give access to large amounts, which you can use to pay off all your unsecured debts.
Credit Card Balance Transfer
Another consolidation option, particularly for credit cardholders, is doing a balance transfer. Some credit card companies offer a zero-interest credit card to which you can move all your credit card bills and pay them off.
What’s more, you get to enjoy an introductory period where no interest accrues on payments. A balance transfer credit card can be a good option for credit cardholders who can pay all their debts before the end of the introductory period.
Debt Management
Oftentimes, individuals struggle with paying down their debts for lacking a path to take. For some people, high-interest rates make it even harder to make payments. By enrolling in a debt management plan, a credit counseling agency will create a payment plan for you at a fee.
A debt management plan (DMP) streamlines your debt repayment as you only have to make a single monthly payment to the agency. In addition to making payment easier, your credit counseling agency can help get the interest rates on your debts lowered by your creditors.
In most cases, individuals take about three to five years to complete a debt management plan. While a DMP doesn’t reduce the principal amount owed, it can help improve your credit if you complete it.
Debt Settlement
Individuals overwhelmed with credit card bills, medical bills, and other unsecured personal loans can benefit from debt settlement. This option allows you to settle your debts by paying less than what you owe by making a lump-sum payment to your creditors.
While Florida debt settlement can help ease your financial situation in the short term, it could have immediate and long-term negatives. Debt settlement will dent your credit score and remain on your credit report for at least seven years.
Bankruptcy
If debt consolidation in Orlando isn’t feasible, filing for bankruptcy could be an option. It is the last resort if you have no other way out of your current debt situation. However, you’ll have to qualify through the Means test before using this debt relief option.
Like debt settlement, bankruptcy may offer short-term debt relief but hurts your credit as it reflects on your credit report for seven or ten years.
Bottom Line
It is not uncommon for individuals to struggle with their debts, especially those who go all-out on their credit cards. If your debt is manageable, debt consolidation in Orlando could be an option to explore. For those who are caught up in debt woes, debt settlement and bankruptcy are viable options, but their negatives are not to be ignored.