Taking Responsibility for Debt While Avoiding Bankruptcy
- UpdatedDec 19, 2024
- Melissa N. relays how her spending habits resulted in debt she couldn’t get out of
- Efforts to remedy her situation on her own – including a home equity loan and balance transfers – did not work
- Melissa explains why FDR’s debt resolution program was a better option than bankruptcy for her
Melissa N. was a homeowner and a mother with what she calls a "great job" that paid very well. The now-retired Fayetteville, North Carolina, resident explains that she got into bad spending habits with an "I want it now" mentality, as opposed to a "Do I need it now?" one. For many years, she found herself turning to credit cards to purchase items she wanted, without considering the consequences. "It wasn't something that happened overnight," she says of her mounting debt. "It was progressive."
She tried to remedy the situation on her own, by making bigger monthly payments, taking out a home equity loan and doing balance transfers. "I thought, being an educated woman with a bachelor's degree in engineering, that…I should be able to get out of this." But none of the steps she took changed her spending habits.
When she made the first call to Freedom Debt Relief, she talked with a representative who was "someone like me," says Melissa. "I felt stupid because of the situation I had gotten myself into."
However, the Freedom Debt Relief representative, "made me feel very comfortable," Melissa says.
The representative explained the program to her in detail, Melissa explains. "I felt very…confident that the program was what I needed." In looking at alternatives, Melissa says she was "embarrassed" to go through bankruptcy, and "did not want to have a bad credit rating haunting me for years." She also felt responsible for her debt, and wanted an option that helped her repay her creditors.
"You feel like you're drowning," says Melissa of her spiraling debt. "FDR was that life jacket."
"It was the best decision I ever made," she adds. "My only regret is…I didn't do it sooner."
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.
Tackle Financial Challenges
Don’t let debt overwhelm you. Learn more about debt relief options. They can help you tackle your financial challenges. This is true whether you have high credit card balances or many tradelines. Start your path to recovery with the first step.
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