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Debt Settlement

The good news is that Alaska's average fell by 3.2 percent when compared to the final quarter of 2012. But credit card debt isn't the only financial obligation Alaskans have to contend with. According to The Credit Examiner, the average Alaskan household has $30,375 in total consumer debt.

It's not surprising that many Alaskans feel as though they are drowning in debt. So, what can you do if you feel that your debt is getting out of control? Debt settlement can be one way to overcome your debt problems.

What is Debt Settlement?

Debt settlement is a process by which you reduce the amount you owe by negotiating with creditors. Alaska residents can contact creditors and suggest paying a lump sum to clear their debts, rather than continuing to try to make untenable payments.

It's possible for debt settlement to be even more effective if you work with an accredited debt settlement company. With a company representing you, creditors know that you are serious about your efforts to clear your debts. A debt settlement company can also advise you of actions you can take to improve the chances that your offer will be accepted by creditors.

Realize, though, that debt settlement can impact your credit score. A key part of the process is to stop making credit payments while your settlement is negotiated, and this will bring down your credit score. However, Alaskans drowning in debt might find it worth the lower credit score to have the peace of mind that comes with successful debt settlement.

Do You Qualify?

Before you attempt to settle your debt, make sure that your debts are eligible for settlement in Alaska. Bills that can be settled in Alaska include:

  • Credit cards
  • Medical bills
  • Unsecured debt (no collateral)
  • Phone bills
  • Personal loans and bills

It also helps to be aware of the statute of limitations for each type of debt. In Alaska, you can't be sued for a debt related to oral and written contracts after six years. For promissory notes and open-ended accounts (like credit cards), you can't be sued after three years. Take this into account as you begin negotiating debt settlement.

If you are an Alaskan struggling with debts, it's possible that debt settlement can help you get past this financial difficulty and allow you to start rebuilding.

Credit Counseling

High credit card debt is endemic all across the United States, but in Alaska, the average consumer has more than $6,900 in credit card debt according to a TransUnion Second Quarter 2013 report. That’s more than $1,000 higher than the next state on the list and makes Alaska the top state for credit card debt. This amount continues to increase in 2013 as the economy remains stagnant and dependent upon the oil industry.

Consumer debt, however, isn’t the only debt Alaskans have. Household debt for the average Alaskan is $30,375, as reported by The Credit Examiner. This debt includes both secured and unsecured loans, but doesn’t include the $24,760 of student loan debt of the average student.

Many residents continue to feel overwhelmed by debt. But debt doesn’t have to be overwhelming when there is help available. Professional credit counselors can help you navigate the ins and outs of budgeting, personal finance and debt repayment.

Contact An Approved Credit Counselor

The first step to take when considering a credit counseling organization is to make sure they are approved. The United States Department of Justice maintains a list of approved Credit Counseling agencies in the state. Be sure to review the list and look for an approved agency. In Alaska, credit counseling is required before filing for bankruptcy, however few laws exist to regulate credit counseling agencies. This makes it all the more important to use an agency approved by the Justice Department.

Ask Detailed Questions

Fees for counseling can range from $50 to $100 for a certificate of completion (needed to file bankruptcy), and can be higher for a debt reduction plan. Before agreeing to a course of action, ask what the fees are. Watch out for high startup fees, steep maintenance fees and other charges that you don’t understand.

Understand Your Plan

Many credit counselors will use a debt management plan to repay your creditors at a reduced interest rate. The plan is setup so you make one payment to the agency, and the agency allocated your payments for you. Your creditors have to agree to this arrangement (and most generally do), but not all of them do. Be sure you know which creditors are being paid.

Meet With Your Credit Counselor

It’s important to meet your counselor, whether in person, over the phone or online. Being honest about your financial situation and habits will help them make the best plan suited for your individual needs.

Once your plan starts, be sure to follow-up. It will take work, but by following your counselors advice, you can develop life-changing habits that can help you stay out of debt in the years to come.