Alabama Debt Relief by the Numbers: 5-Year Debt Trends
Alabama has one of the lowest costs of living in the U.S., about 12% lower than the national average. That makes life in the Yellowhammer State very affordable, particularly when it comes to home prices. That low cost of living, however, has a median household income to match. The state’s median income—$66,700—places it 44th among U.S. states, according to the U.S. Census Bureau.
For many in Alabama, income doesn't cover everything they need, so borrowing becomes necessary.
Alabamians borrow less than average—substantially less. The median debt among Alabama adults in 2024 was $47,100 in 2024. That’s about $14,500 lower than the national average debt per adult.
Some Alabama residents end up borrowing more than others, and many state residents are struggling and in need of debt relief. Estimated debt among Alabama residents seeking debt relief in 2024 totaled $27,348.
Let's dig into the details about Alabama residents who are in need of debt help to better understand their financial situation and the trends in debt struggles in the state over time.
Alabamians can free up cash each month with Freedom Debt Relief
Ozzy S., Freedom client²
“Right away, I had more money each month because of program costs so much less than what I was paying on my minimums.”
Excellent •
5-Year Debt Trends in Alabama
In Alabama, debt levels dropped in 2021 before rising again in 2022. By 2024, debt levels showed a steep climb.
Larger economic forces definitely helped drive some of these patterns. For example, in 2020, debt relief seekers in Alabama had an average of $21,470 in estimated debt. The next year, estimated debt dropped to $19,128 most likely because the government provided COVID-19 stimulus money that helped many people's finances. Debt relief seekers nationwide reported an estimated debt of $25,939 in 2020, which declined to $21,363 the following year.
Then, inflation started erasing the temporary relief from stimulus checks, causing many people to spend more and go more deeply into debt in the post-pandemic era.
This helps to explain why estimated debt for Alabama debt relief seekers hit $27,348 in 2024. That’s closing in on $1,000 more than the average debt level of people looking for debt help that same year, and considerably higher than the money owed before the pandemic.
Alabama credit card debt
Generally speaking, debt causes some people problems, especially if you borrow more than you can afford. Of all types of debt, though, credit card debt is one of the most problematic kinds for several reasons:
It’s easy to fall into long-term debt
The costs are steep
Monthly payments are cheap, but interest is expensive
Credit card debt in Alabama is below the national average. Among debt relief seekers in Alabama, the average credit card balance was $13,205 in 2024, while for debt relief seekers nationwide, the average balance that same year was $14,295.
Alabama residents seeking help with debt actually had lower balances over 2020 to 2024. In 2020, the average balance for debt relief seekers in the state was $15,735. Four years later, it was $13,205. This mirrors national trends. In 2020, the average credit card balance for debt relief seekers throughout the country was $16,553, which dropped to $14,295 in 2024.
In 2024, the average credit card amount past due in Alabama was $4,220, and credit utilization among debt relief seekers was 78.2%, up from 67.4% in 2020. Higher utilization rates damage your credit score.
For those who are behind and struggling, looking into credit card debt relief options in Alabama could be a good idea.
Alabama auto loan debt
Car loans aren’t typically as expensive as credit card debt, and many people use car loans to help finance their vehicles because it’s simply too expensive to buy them outright.
Alabama debt relief seekers in general borrow more than people in other parts of the country, and balances have risen sharply over the past few years. The average auto loan balance was $27,587 among those seeking debt relief in Alabama in 2024, which is higher than the average balance for debt seekers nationwide, at $26,839. It's also much higher than the $23,734 that the typical Alabama debt relief seeker owed on their car loans in 2020.
Payments have climbed along with balances, with the average monthly payment in 2024 coming in at $739 for Alabama debt relief seekers, up from $607 in 2020. Alabama debt relief seekers don't have more open auto loans, though. The average number of accounts was 1.5 in 2020 and continued to hold steady at that number for the next several years—this too is on par with the average number of accounts for people in debt nationwide.
Higher balances for Alabama car loans are most likely due to higher prices, post-pandemic. Those who want a car now need to spend—and borrow—more to get one.
Alabama mortgage debt
Mortgage is generally accepted as a debt that’s more acceptable than credit card or personal loan debt, because it features:
Lower, often fixed interest rates
Longer repayment terms
Tax breaks
Equity
Homeowners have the opportunity to build ownership in an asset that usually goes up in value over time.
Too much mortgage debt could be an issue because it makes it harder to afford other things you need. Alabama debt relief seekers may not have to worry about that as much as others do, thanks to the state’s easier home prices.
In early 2026, the Alabama housing market was one of the country’s most affordable, with an average home value of $228,634 in early 2026. In 2024, the average monthly mortgage balance among Alabamians seeking debt help was $179,591 in 2024, compared with $241,535 for debt seekers nationwide.
Lower debt balances also mean that Alabama residents seeking debt relief also have lower monthly mortgage payments. The monthly payment was just $1,392 in 2024, compared with $1,949 among debt relief seekers nationwide.
Throughout the country, average monthly mortgage payments for debt relief seekers have risen, going from $1,505 to $1,949 over the years 2020 to 2024. Alabama residents looking for debt help are no exception. In 2020, the average mortgage payment was $1,040, holding steady below $1,200 for several years until 2023, when it hit $1,251.
Mortgage debt is secured, so it’s usually not forgiven or discharged in bankruptcy. Settling or discharging other debts could give you more breathing room in your budget if you're struggling to pay bills.
Alabama installment loan debt
Installment loans typically come with predictable monthly payments so there are no surprises, and the interest rate can be lower than on credit cards.
In 2024, the average installment loan balance was $10,609 and the average debt relief seeker had three installment loans, with a monthly payment totaling $403 on average.
In 2024, Alabama residents looking for help with debt had an average loan balance and monthly loan payment that were fairly similar to those for debt relief seekers throughout the country: $10,609 and $403, compared with $10,582 and $436 nationwide.
Alabama student loan debt
Student loan debt is a major issue nationwide as the cost of tuition has spiraled and many Americans must borrow substantial amounts for their education.
Rising tuition costs and expensive student loans are definitely taking their toll on Alabama residents seeking debt relief. The average student loan balance for Alabamians in debt hit $53,658 in 2024, a nearly $8,000 increase from balances in 2020.
The $53,658 average balance in Alabama is also higher than the nationwide average student loan balance of $49,861. Monthly payments in Alabama are similar and sometimes identical to that of debt seekers nationwide: in 2024, debt seekers in Alabama and nationwide had a monthly loan payment of $298.
Alabama Debt Delinquencies and Collections
Many Alabama residents have fallen behind on debt payments. Among Alabama debt relief seekers, for example, there was an average of two accounts in collections in 2024 and the typical collection balance was $2,656. The past-due collection balance was $2,494, and the typical collection monthly payment was $943.
Past due amounts in Alabama have been falling, and average past-due amounts in 2024 were close to half the amounts of 2020:
2020: $4,463
2021: $4,429
2022: $3,036
2023: $2,898
2024: $2,494
In 2024, collection past-due amounts averaged $3,694 among Americans seeking debt relief nationwide, in 2024.
Past due accounts could mean risking collections efforts, account closure, and fees and fines, as well as damage to your credit. It's best to resolve issues with accounts that you're falling behind on ASAP. Freedom Debt Relief could help, as falling behind on monthly payments can actually make it easier to settle your debt for less than you owe.
Alabama Statute of Limitations
Alabama’s statute of limitations applies to debt collectors and regulates how long collectors have to take action. If the statute of limitations expires, a debt is time-barred and debt collectors can no longer sue you for repayment.
Here are the time limits for different kinds of debt.
| Type of Debt | Statute of Limitations |
|---|---|
| Credit cards | 3 years |
| Open accounts (medical bills) | 3 years |
| State tax | 3 years |
| Breach of contract | 4 years |
| Unsealed written contracts | 6 years |
| Sealed written contracts | 6 years |
| Oral contracts | 6 years |
| Judgments | 10-20 years |
A creditor loses the right to collect after the statute of limitations has passed. That doesn’t mean they won’t try, though. If you’re sued and you think the debt is time-barred, don’t ignore it. You could ask the judge to throw out the lawsuit. Also, it’s possible to restart the timeline in some cases by making a partial payment, so it’s smart to know your rights when it comes to old debts.
What are the Alabama debt collection laws?
In Alabama, the Fair Debt Collection Practices Act provides protection against abusive behavior by debt collectors. The Alabama Deceptive Trade Practices Act extends the protections in the FDCPA to original debt creditors and collectors, not just to third-party collectors.
The FDCPA and Alabama laws require that collectors identify themselves and the nature of their request for payment. If you request proof of the debt within 30 days of the time that they contact you, they must provide it or stop contacting you.
They also have to stop contacting you at your request. They can still move forward with other collection activities, and notify you if they take specific legal actions.
Debt collectors are also barred from certain abusive behavior, and they can’t:
Tell others about your debt
Call you early in the morning or late at night
Call your work if your employer prohibits collection calls
Pretend to be lawyers or make false threats against you
Claim falsely that you committed a crime
If a debt collector violates these rules, they can face consequences, including civil penalties and fines.
Alabama Debt Relief
Here are some Alabama resources and programs that could help if you’re having issues with bills, falling behind on payments, or facing financial hardship.
You can look for debt relief through these Alabama resources for residents:
Home repair grants for storm damage. The Home Recovery Alabama Program (HRAP) provides federal grant funding to repair, reconstruct, or replace single-family homes and mobile homes damaged by Hurricane Sally/Zeta 2023 tornadoes.
Foreclosure prevention. Housing agencies such as the Birmingham Urban League and Community Action Agencies offer counseling for mortgage default and rental issues. For more information, check out the Alabama Housing Finance Authority.
Home energy costs. The LIHEAP (low-income assistance program) helps low-income families meet the costs of home energy, such as cooling and heating.
Many people in Alabama get help from Freedom Debt Relief, a professional, experienced debt relief company. In 2024, 2,706 Alabama residents enrolled with Freedom Debt Relief, with an average enrolled debt of $22,405.
Is Debt Consolidation the Best Debt Solution?
Debt consolidation is one option if you’re struggling with debt, but it doesn't always work perfectly in every situation. Debt consolidation means getting a new loan to repay existing debt, but you must:
Have good enough credit to get a new loan at an affordable rate
Be able to make payments on your new consolidation loan
Debt consolidation isn’t always the right for someone’s specific situation. Read through the options and get to know the different strategies for dealing with debt. Some people might be better off with other debt solutions.
Here are a few debt solutions that might help you get rid of debt faster, depending on your financial situation.
DIY debt relief
This means creating your own plan to pay extra toward your debt. If you don't owe a huge amount to creditors, this could work well.
Two popular DIY methods are the debt snowball and the debt avalanche. Each one has you target a specific debt to put extra money toward. You pay the minimum on all your other debts. When you’ve wiped out the first debt, you add that monthly payment to the next debt on your list. As the months go by, you’re making bigger and bigger payments toward your balances.
The snowball has you prioritize the smallest balance for an easy win, and the debt avalanche orders your debts by interest rate so you save money by paying off the highest-interest debt first.
Debt consolidation
With debt consolidation, you take out a new loan with more favorable terms to pay off existing debt. If you can qualify for an affordable new loan, this option could work without damaging your credit.
Debt settlement
If you can't pay all that you owe, debt settlement could be right for you. If you fall behind on your payments, a debt settlement company could help you negotiate with creditors to pay less than the full amount as full satisfaction of the debt.
You could DIY debt settlement by calling your creditors, explaining your situation, and asking them to settle your debt for less. You may have a better chance of success by using a professional company, since experienced Debt Consultants have a track record of working with creditors and negotiating settlement agreements.
Debt management plan
A credit counseling agency can set up a debt management plan for you. You'll make one monthly payment to your credit counselor, who will distribute it to your creditors. Your counselor may be able to get fees waived and interest charges lowered. You'll still repay your full balances, and your credit cards will be closed.
Chapter 7 bankruptcy
If you have limited financial means and are willing to lose some assets, you can look at Chapter 7 liquidation bankruptcy as an option to erase your unsecured debts quickly. Many people who file for Chapter 7 bankruptcy don’t give up anything they own.
Chapter 13 bankruptcy
You'll need to explore Chapter 13 if you want to pursue bankruptcy but you make too much money to qualify for Chapter 7. Chapter 13 requires you to participate in a three- to five-year repayment plan, which many people struggle with. The rest of your eligible unsecured debt balance is forgiven after the plan is completed.
Alabamians can free up cash each month with Freedom Debt Relief
Ozzy S., Freedom client²
“Right away, I had more money each month because of program costs so much less than what I was paying on my minimums.”
Excellent •
How does Alabama debt relief work?
Alabama does not offer debt relief but private companies do. You can work with a licensed credit counselor to create a debt management program that simplifies repayment and may allow some fees to be waived. You can also work with Freedom Debt Relief to negotiate with creditors to have some of your debt forgiven.
Is Alabama debt relief legitimate?
Alabama debt relief is legitimate, through reputable providers. Freedom Debt Relief has helped many Alabama residents to negotiate with creditors and reduce their balance owed. If you’re considering debt relief, check with the Better Business Bureau and TrustPilot to ensure the company you’re considering has a good reputation. Research your options carefully and make sure you understand that debt relief is likely to cause temporary credit score damage, but could ultimately help you begin rebuilding your finances.
How long can debt collectors collect debt in Alabama?
The timeline for collecting debt in Alabama depends on the type of debt and which statute of limitations applies. The timeline is typically between three and 20 years. A three-year statute of limitations applies to credit card debt, while collectors have four years to collect debt based on breach of contract and 20 years to collect a court judgment. Laws can and do change, so it’s a good idea to check with your state’s Attorney General’s office.
End Your Debt
Find out how our program could help.
- One low monthly program deposit
- Settlements for less than owed
- Debt could be resolved in 24-48 months
