New York Resident Debt Relief

Frank Sinatra sang that if you can make it in New York, you can make it anywhere.

He’s right, though increasingly you have to make it with the help of a credit card.

The pandemic walloped New York’s economy, but the state recovered pretty well. The worry is that the brewing recession will bring a tidal wave of new debt to New York consumers.

For starters, it’s never been cheap to live in the Empire State. The government’s cost of living index rated New York No. 4 on its priciest places to live list in 2022.

The red warning flag started waving in February. That’s when the Federal Reserve Bank of New York reported the highest quarterly increase of credit card debt in the 22 years it has been collecting that data.

The average New Yorker now carries almost $7,000 of credit card debt. That’s in spite of a generally robust economic recovery from COVID-19.

New York City’s shutdown led to a 20% drop in the employment rate, but America’s largest city slowly dug itself out of the hole, as did other regions. The state’s unemployment rate dropped from 7.1% in May 2021 to 4.1% one year later.

Almost 80% of the jobs lost between February and April of 2020 have been recovered. Unemployment claims are down 82% since January of 2021, so the labor market is good.

What’s not-so-good is the debt many laborers are piling up. If you are one of them, help is available.

Debt Relief Options for New York residents

If you’re having financial problems, many New Yorkers have gotten help through InCharge Debt Solutions’ debt management program. Certified credit counselors are available to help customers consolidate their credit card debt, lower interest rates and create manageable monthly payment plans.

InCharge can help customers eliminate credit card debt in approximately 3-to-5 years. Clients must abide by a strict spending budget and make payments on time every month to eliminate that troublesome credit card debt

The average customer had to pay 17.9% interest on their credit card debt in 2022 Those who failed to pay their debts on a monthly basis likely saw those interest charges jump to 25%, and occasionally as high as 30%. That’s highway robbery.

InCharge works closely with the credit card companies to reduce interest rates to approximately 8% and get to a monthly payment plan that consumers can afford. InCharge coordinates the monthly payments and gives them to creditors in amounts previously agreed upon.

To enroll in this easy-to-manage plan, InCharge consumers need only go online to sign up or contact a counselor over the phone.

There is one other major factor to consider before beginning a debt management plan: Your credit score does not matter! New Yorkers with low credit scores can still qualify for debt management plans. In fact, they are typically the ones who benefit most from the plans.

Debt management programs are the simplest and most effective way to take care of debt, but there are other options for struggling New York residents to consider:

• Debt Settlement – If you can’t find a solution for soaring credit card debt, personal loans, and medical bills, debt settlement is an option to consider. This plan usually involves a settlement company negotiating with creditors for a deal that allows you to pay less than what is owed. The goal is to pay 50% or less than what you owe, but getting there is not easy. It usually requires 2-3 years of monthly deposits to build up a sizeable enough sum to offer the creditor a lump-sum payment. Creditors are not obligated to accept settlement offers and some won’t even consider one. Debt settlement will be a negative hit on your credit report and remain there for at least seven years. Also, the IRS will consider forgiven debt of more than $600 as regular income when you file taxes.
• Debt Consolidation Loan – Consumers with solid credit scores (above 680) should qualify for a debt-consolidation loan from a bank, credit union or online lender. Consumers use that low-interest loan money to pay off high-interest credit card debt. Then, they will start monthly payments to the lender at a significantly lower interest rate than the one charged by credit card companies. One negative is that you are simply shifting debt from one source to another and running the risk that new debt will pile up if you continue using credit cards to pay bills. Plan on developing a strict budget if you want this option to work.
• Credit Card Debt Forgiveness – This program is offered by a specialized group of nonprofit credit counseling agencies, including InCharge Debt Solutions, and is similar to for profit debt settlement. The difference is that there no negotiating with lenders involved. Creditors agree in advance to accept 50%-60% of what is owed in 36 fixed monthly payments. No interest is charged on the debt, as long as payments are made on time. Not all credit card operators or nonprofit credit counseling agencies participate in this program.
• Bankruptcy – Some praise it as “a fresh start,” though what comes next lingers for 7-10 years. Chapter 7 and Chapter 13 are the most popular forms of bankruptcy, and both will allow you to eliminate credit card debt. However, filing for bankruptcy will lower your credit score 100-200 points and remain on your credit report for 7-10 years. This should only be considered as a final option.

New York Debt Resources

The state of New York and the federal government have a myriad of programs designed to help people deal with a financial crisis. Here is a short list of places to try if you are struggling financially.

Supplemental Nutrition Assistance Program: SNAP issues electronic benefits that can be used to purchase various food items. The plan helps low-income working residents, seniors and the disabled. Eligibility will be determined by household size, income and other factors.

Temporary Assistance for Needy Families: The TANF program is designed to provide temporary assistance for needy adults and children. If you are unable to work, can’t find a job or you aren’t making enough money for food, shelter and essentials, the Temporary Assistance plan might be able to help.  The two major plans that provide assistance are Family Assistance and Safety Net Assistance. In the Family Assistance plan, eligible adults can receive benefits for 60 months.

Home Energy Assistance Program: HEAP helps low-income residents pay for heating their homes during New York’s winter months. If eligible, you may receive one regular HEAP benefit per program year if you are in danger of running out of fuel or having your utility services cut off. HEAP may be able to heat your home with electricity, natural gas, oil, coal, propane, wood, kerosene or corn.

Emergency Rental Assistance Program: Under ERAP, new applications are only being accepted in the area where the ERAP funding hasn’t been exhausted and in parts of the state with income higher than 80% and up to 120% of the area median income.

Child Support Services: The Child Support Program provides custodial parents with help in obtaining support and insurance coverage for their children by locating parents, establishing parentage, establishing support orders and distributing child-support payments. The New York State Child Support Program also helps survivors of family violence access child-support services safely. If you plan to attend a court hearing, check it out for advice about how you can attain child-support to properly raise your children in a safe environment.

Fair Hearings: The Fair Hearing program allows you to tell an Administrative Law Judge from the New York State Office why you think a ruling about your case was wrong. The Office of Temporary and Disability Assistance will issue a written decision which will state whether a local agency’s decision was correct.

Employment and Training Services: The Office of Temporary and Disability Assistance runs employment programs offered through your local department of social services. Employment and Training Services are provided for applicants to support participation in work activities that have been approved and assigned by the local social services department. Those services include childcare assistance for children up to 13 years old, transportation assistance, adult basic education, vocational education and job search assistance.

Social Security Disability Benefits: There are two Federal disability programs — Social Security Disability Insurance and Supplemental Security Income. The SSDI is a Federal disability income program for adults who have worked and are now unable to work because of a disability. The SSI is a program for disabled adults and children who have limited income and resources. It is designed to primarily help blind, aged and others with disabilities and provide food, clothing and shelter.

New York Debt Statistics

Not surprisingly, New Yorkers rank at the top of nearly every statistical category for personal finance. Here are some numbers to back that up.

• Credit card debt: On average, New Yorkers have $6,983 in credit card debt — the 9th largest amount in the U.S. The national average is $6,569.
• Mortgage debt: The average mortgage debt in New York in 2022 was $283,954. That’s the 9th-highest in the U.S.
• Student Loan debt: On average, New Yorkers with student loans owe approximately $38,668, which ranks sixth in the nation. Approximately 12.2% of New Yorkers carry student loan debt.
• Auto loan debt: New Yorkers rank sixth in the nation in the least amount of auto debt with an average of $16,483.
• Household debt: New Yorkers owe an average of $48,700 in total household debt, excluding their home mortgages. That total ranks as the seventh-lowest amount of household debt in the nation.
• Bankruptcies and foreclosures: New Yorkers filed for 14,734 bankruptcies in 2021, which was 32% below the national average. There were 7,634 foreclosures through the first six months of 2022, which was 24^th-highest in the U.S.
• Credit scores: The average score in New York in 2021 was 722, slightly better than the national average of 714.
• Identity theft: The nation’s fourth-most populous state ranked eighth in identity theft in 2021, with 563 cases per 100,000 residents.

The Best Option for New Yorkers in Debt

Sinatra, who was synonymous with New York, also sang “My Way.” When it comes to eliminating debt, New Yorkers can certainly try to do it their way. It’s just easier many times to get a little help, especially when you’re in unfamiliar territory.

InCharge Debt Solutions credit counselors are trained to know the ins and outs of debt relief. They are experienced with analyzing a client’s finances and devising plans that eliminate debt. They don’t just offer a plan on paper, it’s ongoing advice and dealing with creditors.

Federal law requires counselors to offer clients the best options available. Consumers struggling with debt can do it their way if they want, but it’s easier to make it in New York or anywhere else with a little help.