Recovering from a Contractor Gone Wrong…Without Bankruptcy
- UpdatedDec 19, 2024
- Pamela L. encountered debt problems after a botched home renovation
- She turned to Freedom Debt Relief for assistance and to avoid resorting to bankruptcy
- Pamela says she appreciated the way Freedom Debt Relief explained the process and worked with her along the way
When Pamela L. set out to build an addition on her house, she had no idea she would end up with a shaky foundation, sub-standard plumbing and an unlivable home. Nor did she realize that in redoing all the work, she’d end up with no retirement savings, maxed-out credit cards and a mountain of debt.
She chose the Freedom Debt Relief program to help her pay what she could without resorting to bankruptcy. “I have worked as hard as I could to keep my Beacon [credit score] up, to keep my credit established…I knew if I went in bankruptcy, it would mess all that up,” Pamela said.
Bankruptcy, she added, “is so final. It seems like it lingers on your record forever.”
With the Freedom Debt Relief program, “I knew my Beacon [credit score] would go down…but it would eventually come back — and it wouldn’t be on my record that I actually went into bankruptcy.”
Plus, “it was my debt. Hands down, I feel like if I owe it, then I need to pay it,” Pamela said. So even though she was struggling, she wanted to pay what she could. The Freedom Debt Relief program was a way to get the help she needed.
Pamela noted that the Freedom Debt Relief representatives explained everything about the process up front and said she felt that the monthly payments she made were reasonable. She also appreciated the support she got from Freedom Debt Relief throughout her journey. “You have to stick with the program. I needed that structure. I needed that to help me to focus.”
“It was a long process, but it paid off in the end and saved me a lot of money,” Pamela said.
Today, Pamela says her credit score has recovered, she has completed the work on her home and refinanced her mortgage. “Thank goodness I found Freedom and went this route,” she concludes. “There were little bumps in the road along the way, but all-in-all, it was, for me, the best option. A win-win.”
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during November 2024. The data uncovers various trends and statistics about people seeking debt help.
Credit utilization and debt relief
How are people using their credit before seeking help? Credit utilization measures how much of a credit line is being used. For example, if you have a credit line of $10,000 and your balance is $3,000, that is a credit utilization of 30%. High credit utilization often signals financial stress. We have looked at people who are seeking debt relief and their credit utilization. (Low credit utilization is 30% or less, medium is between 31% and 50%, high is between 51% and 75%, very high is between 76% to 100%, and over-utilized over 100%). In November 2024, people seeking debt relief had an average of 79% credit utilization.
Here are some interesting numbers:
| Credit utilization bucket | Percent of debt relief seekers |
|---|---|
| Over utilized | 30% |
| Very high | 32% |
| High | 19% |
| Medium | 10% |
| Low | 9% |
The statistics refer to people who had a credit card balance greater than $0.
You don't have to have high credit utilization to look for a debt relief solution. There are a number of solutions for people, whether they have maxed out their credit cards or still have a significant part available.
Home-secured debt – average debt by selected states
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) (using 2022 data) the average home-secured debt for those with a balance was $212,498. The percentage of families with mortgage debt was 42%.
In November 2024, 25% of the debt relief seekers had a mortgage. The average mortgage debt was $236504, and the average monthly payment was $1882.
Here is a quick look at the top five states by average mortgage balance.
| State | % with a mortgage balance | Average mortgage balance | Average monthly payment | |
|---|---|---|---|---|
| California | 20 | $391,113 | $2,710 | |
| District of Columbia | 17 | $339,911 | $2,330 | |
| Utah | 31 | $316,936 | $2,094 | |
| Nevada | 25 | $306,258 | $2,082 | |
| Massachusetts | 28 | $297,524 | $2,290 |
The statistics are based on all debt relief seekers with a mortgage loan balance over $0.
Housing is an important part of a household's expenses. Remember to consider all your debts when looking for a way to get debt relief.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
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