Although Alabama is known for having large populations of families below the poverty line, Alabamans’ average credit card debt is just $4817, which is lower than the nationwide average credit card debt of $5235 per borrower. The state also ranks better in terms of home ownership at 73.2% versus the nation’s average home ownership of 65%.
Having confidence in your debt relief goals can mean the difference between avoiding the phone and being able to confidently go to your mailbox knowing that no threatening late notices will be waiting. For the Alabama debt help that you need to reclaim your financial life, you first need to understand your rights and responsibilities under Alabama debt consolidation and protection laws.
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Three driving factors are pushing Americans towards the highest consumer debt in the nation’s history. Auto loans, college loans, and credit card use has pushed U.S. households towards nearly $13 trillion in debt as of 2017. Indeed, as debts increase and expenses rise, many of us turn to our credit cards to fulfill immediate shortfalls, and before long we find ourselves in a deep financial hole before we are fully aware of the danger.
Understanding your rights and responsibilities regarding your creditors begins with knowing the statutes of limitations on your account. Although it varies state by state, the statute of limitations is a specific limitation on the time in which creditors can file legal action against you for past due debts. In Alabama, the statutes of limitations on outstanding debts are:
If you are trying to get out of debt and aren’t sure where to turn, you need to discuss the range of debt management options available to you. Our team of financial experts is standing by to help you with the Alabama debt relief that you need to get back on your feet.
Alabama residents can choose from a variety of debt relief programs. The most common debt relief options in Alabama include:
A process where debt is negotiated for less than the amount owed. This can be done by the debtor or a company on behalf of the debtor.
A process where a lower interest rate and monthly payment is negotiated but the full amount of debt is repaid. This is usually debt through a non-profit credit counseling agency.
A process where a loan is taken out with a lower interest rate than what the debtor is currently paying. This is done through a bank or lending company.
Whether or not a debt relief program is a good idea depends on a few factors. Not all companies offering debt relief programs are legit, so you’ll have to research their credentials before signing up for a program. Legitimate companies will have proper accreditations and usually good customer reviews.
Be sure to compare what debt relief companies in Alabama have to offer before doing business with them. Any company demanding upfront fees should raise a red flag so be cautious moving forward.
When a person fails to pay their credit card debts in the state of Alabama, credit card companies and/or banks will eventually close the account(s) after several months of non-received payments. At this point the bank may turn the account over to a collection agency to try to recoup the debt owed.
The State of Alabama functions under the Fair Debt Collections Practices Act (FDCPA) enforced by the FTC. In addition, they have their state law, the Ala. Code §40-12-80, that debt collectors must abide by. It says collectors should file for a special license that will allow them to collect debts from consumers. This includes payment of a license tax based on where they practice their business. “Debt collectors”, as specified under this law is based on the definition provided by the FDCPA.
Any debtor or consumer who feels that the creditor and/or collection agency is not following the law can file a complaint. They can contact the Alabama State Attorney General through the Consumer Affairs Division (334) 242-7300 or (800) 392-5658.
In Alabama, the statute of limitations provided under Code Section 6-2-34 is six (6) years. An action must be taken within three (3) years for an open account or unliquidated account. After this period of time has expired without the creditor taking legal action, they will no longer be able to file a legal claim in an attempt to collect the debt.
Debt collectors must follow Alabama Code §40-12-80 which forces debt collections to obtain a special license to try to recoup debt from consumers. Debt collection policies operate under the Fair Debt Collections Practices Act that is enforced by the FTC.
If you feel like a debt collector is acting outside the legal limitations set up with the Fair Debt Collections Practices Act, you can file a complaint against the agency or creditor by contacting the Alabama State Attorney General’s office.
Depending on the type of debt relief program a creditor chooses will determine the affect on their credit score.
For instance, debt management plans work with creditors usually through credit counselors to pay back debt in full which helps preserve a good credit score.
While bankruptcies will have a devastating affect on a credit score and will take many years to recover.
Debt Settlement plans work by negotiating a lower payback amount with the creditor. Through this process all accounts are closed with the creditor which will have a negative affect on a credit rating but once the plan is completed, credit scores can improve quickly as credit is rebuilt.