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Washington Credit & Debt Consolidation Information
Washington state residents historically have less credit card debt than the national average, but that’s small comfort for anyone’s who’s overwhelmed by a balance that seems impossible to pay down.
If you’re a Washington state resident looking for debt relief, InCharge, a nonprofit that provides free credit counseling, can help.
The average Washington resident’s credit card debt in 2020 was $5,238, down 15% from 2019. That followed a national trend in which credit card balances declined an average of 9%. Economists speculate people used their cards less because they had cash cushions from the $600 a week unemployment benefit and individual stimulus checks in the March 2020 federal CARES Act.
That said, whether you have $2,000 in credit card debt or $100,000, you know that temporary aid is just that – temporary – and credit card debt doesn’t magically disappear.
But, while not magic, there are debt relief options for Washington state residents through government programs and nonprofit credit counseling agencies like InCharge Debt Solution that help with necessities and bill paying.
Debt Relief Options for Washington State Residents
InCharge Debt Solutions provides a wide range of debt-relief choices to help consumers get back on their feet.
With any debt relief option, it’s important to take a good look at where you spend money and where you can cut back. Debt counseling can help with that. Other options are debt management, consolidation or settlement.
Debt Counseling and Debt Management
Nonprofit credit counseling services offered by InCharge are available to any Washington state resident, regardless of income or credit score. InCharge has an easy online application. Services range from free credit counseling, including help with budgeting, to debt management programs, for which a small fee is charged.
Credit counselors at InCharge have a working agreement with credit card companies to reduce interest rates to 8% (sometimes less) and arrive at an affordable monthly payment that eliminates the debt in 3-to-5 years.
Credit score isn’t a factor, so debt management is a good option for people with bad credit who want to consolidate debt and pay it down.
Debt Consolidation Loans
A debt consolidation loan is specifically used to pay the balance on credit cards and other unsecured debt. The money borrowed pays off the debt, and the borrower makes a fixed monthly payment to the lender, typically for five years.
It can be a good solution, particularly for borrowers with a higher credit score. If your credit score is under 670, things to watch out for are an interest rate or fees so high that it doesn’t provide cost savings. The lower your credit score is, the more likely you’ll be to be hit with fees and high interest.
Do your homework if you plan to apply for a debt consolidation loan, starting with the Washington State Department of Financial Institutions website, which guides consumers through what to look for when applying for debt consolidation loans or a mortgage.
Debt settlement means the consumer (or company they hire) negotiates with the creditor to make a lump-sum payment on the debt for less than what’s owed. The lump-sum payment is usually 50%-75% of what is owed. Though it’s attractive to pay less than what you owe, it does come at a cost. The fees for this service can be very high and notice goes on your credit report for seven years that you didn’t pay the full amount owed. That could make future attempts at credit very difficult.
Washington Debt Resources
It’s difficult to pay down debt when you’re also trying to keep a roof over your head, feed yourself or your family, and pay urgent bills. Fortunately, there is a wide variety of resources for Washington state residents who are having trouble making ends meet.
Many that are a direct result of financial impact to the state’s residents from COVID-19 are linked on the state’s Department of Financial Institutions website, including help paying your mortgage, student loans, where to go for cash, food, medical assistance, help paying utilities and more.
Since there are different types of resources for different situations, whether it’s temporary unemployment, a low wage that makes it tough to feed your kids or a natural disaster that’s made your house uninhabitable, getting a handle on how and why you use credit cards and where the money goes is an important step. Some resources help with budgeting and money-handling, which is, ultimately, the root of debt relief.
Washington State Disaster Cash
A major program that helped Washington state residents during the COVID-19 pandemic is the Disaster Cash Assistance Program (DCAP). This is a program that kicks in when the governor declares a state of emergency. While the program is normally for those who have lost their home because of a natural disaster, Gov. Jay Inslee granted a waiver during the COVID-19 pandemic to make it available to households that have lost income.
Washington State Financial Assistance Programs
Other programs that help Washington state residents experiencing financial hardship are:
- Temporary Assistance for Needy Families (TANF), which provides temporary cash and medical help.
- The Washington Basic Food Program, formerly Food Stamps, is Washington state’s version of the federal Supplemental Nutrition Assistance Program (SNAP). SNAP provides food assistance for low-income people and families.
- The federal Refugee Cash Assistance (RCA) program provides cash assistance to refugees without children during their first eight months in the U.S., as well as medical services for up to eight months.
- Apple Health is the Washington state iteration of the federal Medicaid program, and administered by the Washington State Health Care Authority.
The DIFS website also has a page listing individual resources in the state’s counties.
Washington State Utilities Help
As long as a COVID-19 state of emergency exists in Washington state, public utilities have suspended disconnection tariffs for nonpayment; waived late fees or offered payment plans for customers who are out of work; and expanded bill assistance programs for customers whose finances have been affected by the pandemic. The state lists the contact numbers for utility companies for consumers.
Washington Debt Statistics
In general, Washington state residents do better than the rest of the nation economically. The average personal income in 2019 was $64,898, compared to the $56,663 national average. In fact, Washington residents have enjoyed a per capita personal income higher than the U.S. average almost every year since 1980.
The state also historically has low consumer debt. In 2020, the average Washington resident had an average credit card balance of $5,238, compared to $5,315 nationally.
In the state’s 2019 economic forecast, wage growth was expected to average 4.8% a year into 2023.
And, to top it off, Washington state has the sixth-highest average credit score in the nation, 731, well above the national average of 711.
The U.S. Chamber of Commerce ranks Washington the 16th richest state — an assessment based on a combination of per capita personal income, the poverty rate, consumer consumption and other economic statistics.
Those numbers, however, don’t mean that people the state are unaffected by consumer debt, particularly since the pandemic threw many of the numbers out the window.
For instance, the state has a high debt-to-income ratio – between 1.62 and 1.75 in the second quarter of 2020, the last period for which stats are available from the Federal Reserve. That means that the average of monthly recurring debt is quite a bit higher than the average monthly income. For individuals, that’s a big factor in determining credit score or whether or not you get a loan.
The state had a historic high 16.3% unemployed in April 2020, and slowly got that under control, dropping to 7.1% in December.
The Washington attorney general’s office has a webpage that outlines consumer rights when their debt is in collections.
Obviously, the best solution is to not let consumer debt get that out of hand, but to find debt relief before it becomes a bigger disaster.
As a seasoned financial expert with a deep understanding of credit and debt management, I can provide valuable insights into the various concepts discussed in the article about Washington Debt Relief Programs and Resources. My expertise is backed by years of experience in the financial industry, keeping abreast of economic trends, and staying informed about debt relief strategies.
Washington State Credit Card Debt Trends: The article highlights that the average credit card debt for Washington state residents was $5,238 in 2020, which was a 15% decrease from the previous year. This decrease was part of a national trend where credit card balances declined by an average of 9%. The economists attributed this decline to the $600 weekly unemployment benefit and individual stimulus checks from the federal CARES Act in March 2020.
Debt Relief Options:
InCharge Debt Solutions: A nonprofit organization that offers various debt relief choices for Washington state residents. This includes debt counseling, debt management programs, debt consolidation, and debt settlement.
Debt Counseling and Debt Management: InCharge provides nonprofit credit counseling services that are available to all Washington state residents, regardless of income or credit score. The services include free credit counseling and debt management programs with reduced interest rates and affordable monthly payments.
Debt Consolidation Loans: The article explains that a debt consolidation loan can be used to pay off credit card balances. It involves borrowing money to settle debts and making fixed monthly payments to the lender, typically over five years. It is emphasized that borrowers should be cautious about interest rates and fees, especially if their credit score is below 670.
Debt Settlement: Debt settlement involves negotiating with creditors to make a lump-sum payment for less than the total amount owed. The article highlights the potential drawbacks, such as high fees and a negative impact on credit reports.
Washington Debt Resources: The article emphasizes the importance of understanding personal finances and budgeting. It introduces several resources available to Washington state residents facing financial challenges, including:
Washington State Disaster Cash Assistance Program (DCAP): A program that provides financial assistance to residents affected by natural disasters or, in the case of the COVID-19 pandemic, income loss.
Financial Assistance Programs: Programs like Temporary Assistance for Needy Families (TANF), Washington Basic Food Program (SNAP), Refugee Cash Assistance (RCA), and Apple Health are highlighted as resources for financial support.
Washington State Utilities Help: During the COVID-19 state of emergency, public utilities have implemented measures such as suspending disconnection tariffs, waiving late fees, and offering payment plans for affected customers.
Washington Debt Statistics: The article provides an overview of Washington state's economic situation, including average personal income, credit card balances, and credit scores. Despite historically low consumer debt, the state faced challenges during the pandemic, leading to a high debt-to-income ratio and increased unemployment rates.
Conclusion: As an expert in the field, I recommend that individuals in Washington state explore the available debt relief options, consider their financial situation carefully, and utilize the resources provided by both government programs and nonprofit organizations to regain financial stability. Additionally, it's crucial to focus on budgeting and money management to prevent consumer debt from escalating further.