Debt Relief in Massachusetts: Facts, Programs, and Solutions

Living in the second most expensive state in the country presents a unique set of challenges, and if you're in debt, you're certainly not alone. The good news is that there's no need to remain in debt. Massachusetts has several debt relief programs, each designed to fit different circumstances. Here, we'll outline the available programs and help you choose the one that best fits your situation.   

Average Credit Card Debt in Massachusetts

The Bay State has a relatively high amount of credit card debt per consumer, with the average credit cardholder carrying a balance of  $7,282. 

Breakdown of average credit card debt by age group

All age groups have credit cards, but some generations are especially burdened by credit card debt. Here's a breakdown of which generations carry the most nationally: 

Gen Z (cardholders aged 13 to 28) average the lowest credit card balances, which makes sense given how few young teenagers carry credit. 

Gen X carries the highest balance, averaging $7,155 per cardholder. 

Debt Settlement: A Powerful Solution in Massachusetts

Debt settlement can be a powerful tool, helping you navigate your way out of debt. With debt settlement, you or a third-party negotiate with your creditors to reduce the total owed. 

Typically, debt settlement involves making your creditor an offer for a lump sum payment or a series of payments. To save money for offers, most people choose to stop paying their creditors. It’s hard to afford both. 

Stopping payments lets your creditors know that you’re in financial distress and opens the door to negotiations. After all, a creditor could be less likely to negotiate if you’re caught up on all of your payments and not showing any sign that you can’t afford your debts.

Creditors—concerned about missed payments—are sometimes willing to settle for a fraction of your outstanding balance. If a settlement can be reached, you pay the agreed-upon amount. The remainder of the debt is forgiven. 

As incredible as it sounds (and getting out of debt is wonderful), debt settlement has drawbacks. For example, any time you stop paying your creditors, your credit standing is likely to suffer. Then, if you reach agreements with your creditors to close out your debts for less than the full amount you owe, those accounts will be reported as “settled.” This is better than an open collection account but not as good as “paid as agreed.”

There are steps you can take to rebuild your credit once your finances are stable.

Is Debt Consolidation the Right Choice?

Let's say you've kept up with your monthly payments, but feel overwhelmed by the amount of your debt, or you’re concerned about how much you'll spend on interest by the time your debt is paid off. 

Debt consolidation might be a perfect fit for your situation. Debt consolidation involves taking out a loan and using the funds to pay off existing debt. You're then left with a single monthly payment instead of multiple. A consolidation loan could be worth considering if you qualify for a loan that has a lower interest rate compared to the debts you’re trying to consolidate. It doesn’t make sense to consolidate to a loan with a higher rate.

Other Debt Relief Alternatives in Massachusetts

• Hardship programs: Credit card companies and other creditors sometimes offer debt hardship programs. They're designed to provide temporary relief when facing financial hardship like job loss, reduced hours, or a medical emergency. Companies offer relief in various ways, including lowering your interest rate, reducing monthly payments, waiving fees, or pausing payments for a time. 

• Income-driven repayment plans: Income-driven repayment (IDR) plans are typically associated with federal student loans. IDR plans cap your payments to a portion of your discretionary income. If you qualify and after you make all your scheduled payments, any remaining balance is forgiven. 

• Credit counseling: Credit counseling helps with budgeting and financial planning. It helps people understand where they stand financially, and teaches them how to find their way out of debt. One important thing to note is that credit counseling isn't just for those in debt. Anyone who can use help understanding and mastering their finances can use credit counseling services. 

• Bankruptcy: Bankruptcy is a legal procedure for dealing with debt. Depending on the type of bankruptcy filed, the bankruptcy court may discharge (forgive) some or all debts. While bankruptcy remains on your credit report for seven to 10 years, it's possible to begin rebuilding credit almost immediately. 

Understanding the Statute of Limitations (SOL) on Debt in Massachusetts

The statute of limitations is the amount of time a creditor has to sue you on a particular debt. Statutes of limitations vary depending on the type of debt and the laws of your state. The statute of limitations in Massachusetts on consumer-related debt is six years. This applies to credit card debt and oral and written contracts. 

The exception is if the debt collector obtained a judgment against you. If that's the case, the statute of limitations extends to 20 years. 

Taking the Next Steps in Massachusetts

Several viable debt relief solutions exist to solve the problem of mounting debt. The key is finding the one that best suits your temperament and financial status. One method is to wait for the statute of limitations to expire, which means your creditors lose the ability to file a suit against you to get the money back. In the Bay State, you have to wait six years.

But why wait when you can take charge of your destiny and turn your situation around in less time? Most debt consolidation loans take between two and five years to clear. And if debt consolidation isn’t right for you, one of the other programs may be.

Contact Freedom Debt Relief today and learn all about available debt relief options. Our Certified Debt Consultants can help you find your way forward. Call 800-910-0065 for a free debt consultation and start your journey toward fiscal liberty today.