Vermont Resident Debt Relief

Vermont is renowned for maple syrup, with its forests producing nearly two million gallons a year. For all that sticky goodness, the state’s economy is not all that sweet.

Vermont has a $35 billion economy, the smallest in America. That’s due largely to its size and population stagnation, but state tax policies also play a role.

The state was ranked 49^th in economic outlook for 202, according to richstatespoorstates.org. Vermont was among the five most confiscatory states when it comes to personal income taxes, corporate taxes, property taxes, inheritance taxes, and it is not a right-to-work state.

Like all states, Vermont got a load of federal COVID-19 relief money – $9.8 billion, which worked out to $15,778 per citizen.

The Vermont Council on Rural Development issued a report in 2021 that cited steps to stimulate economic activity. They include improving the state’s broad and cellular access, investing in local entrepreneurship and boosting state planning and regional coordination.

It’s hard to predict when or if Vermont’s economic outlook will sweeten. Until it happens, several private and government agencies can help people who need financial help.

Debt Relief Options for Vermont Residents

Debt management programs have proven helpful to consumers who are buried in financial holes and feel incapable of digging out. Nonprofits like InCharge Debt Solutions have certified counselors who work with creditors to reduce a client’s interest rates and consolidate payments.

Interest rates are budget killers. The average credit card was 16.5% in 2021, and that was for people with decent credit scores. Consumers struggling with debt often have rates of 25%. InCharge counselors work with the credit card companies to lower those rates below 10%.

The goal is to get rid of the credit card debt in 3-5 years. Counselors set up a detailed budget, but the main ingredient for success is discipline on the part of the consumer. They must stick to plan and avoid falling back into the spending habits that initially got them in a financial hole.

After negotiating with credit card companies, InCharge combines those bills into one payment for clients. It then distributes those funds to your creditors. Consumers can apply for debt management programs online or over the phone.

If you’re worried about your credit score affecting your eligibility, don’t. The debt-consolidation plan does not factor in credit scores, since people with lower scores are typically those who need the most help.

There are options besides debt management programs for Vermonters needing financial help. They include:

Debt Consolidation Loan – If you do have a decent credit score, you could qualify for a low-interest consolidation loan. That could save you thousands of dollars in interest charges from credit card companies.

Debt Settlement – This is worth considering if you’re facing a mountain of bills that seems impossible to conquer. Emergencies like a hospital stay often contribute to the dilemma. Faced with getting little or no money at all, creditors agree to lower payment that settles the debt. This might solve your financial woes on a short-term basis but can have serious long-term implications. Debt settlement is a black mark on a person’s credit report and stays there for seven years. That would make it more difficult to get credit down the road.

Credit Card Debt Forgiveness – This is offered by a select group of nonprofit credit counseling agencies. The difference between this and traditional debt settlement is that the creditors have agreed in advance to reduce the amount owed by 40%-50%. Consumers can start reducing the amount owed with the first monthly payment. The debt is eliminated in 36 months.

Do It Yourself Plans – Some people have the determination and guile to succeed in going it alone. They set up a budget that meets their family’s needs and makes sure expenditures don’t exceed income. A DIY isn’t for everyone, but it’s worth considering if your debt isn’t excessive and your discipline level is.

Bankruptcy – Consider this a last resort, since a bankruptcy filing stays on your credit report for 7-10 years. But bankruptcy is a way to get rid of all your credit card debt in one fell swoop. You’ll just have a hard time getting a loan or credit for the next decade.

Vermont Debt Resources

Vermont residents who are struggling to find employment or housing or to pay their bills could be eligible for financial assistance through state or federal programs. Here are some services that are available:

• Vermont Homeownership Assistance: A federal program what works with state and regional authorities like the Vermont Housing Finance Agency and Habitat for Humanity to help people buy a home.
• Children’s Health Insurance Program (CHIP): Provides no-cost or low-cost health coverage for children in lower-income families. Coverage includes routine physicals, immunizations and dental care.
• Aging and Disability Resource Connections (ADRC). Provides a wide variety of assistance to consumers, their families and caregivers.
• Vermont State Housing Authority: Provides rental assistance with Department of Housing and Urban Development funds. Available to families, elderly, disabled and single people whose income falls within guidelines.
• Homeownership Preservation Foundation: For those struggling with mortgage payments, counselors develop plans tailored to ease debt loads.
• Vermont Legal Aid: Provides free civil legal services for Vermont residents who are poor, elderly, disabled or have problems with health care.
• Emergency Bill Assistance: There are a variety of state programs designed to help low-income residents pay their heating and utility bills. There are also energy and conservation programs available to all residents.
• Assistance and Discounts on Phone Bills: The Vermont Lifeline program provides discounted phone services for low-income families and individuals.

Vermont Debt Statistics

Residents of Vermont fare well when compared to most states. But like almost all Americans, it’s not a question of whether they’re in debt, it’s just a matter of how much debt they’re in.

Here are some statistics on debt carried by Vermont residents coming out of the pandemic.

• Mortgage debt: The average mortgage debt was $172,919 in 2020, making Vermont one of the few states in the Northeast that is lower than the national average of $229,242.
• Auto loan debt: The average auto loan debt was $16,972, which was about $2,500 less than the national average.
• Credit card debt: The average card debt for Vermonters in 2020 was $4,653. That was the sixth-lowest in the U.S. and about $1,000 below the national average. But if you made only minimum payments, it would still take more than 10 years to pay it off.
• Household debt: Vermonter on average were $83,335 in debt in 2020. That was about $9,000 less than the national average.
• Student loan debt: With an average of $38,411, Vermont had the seventh-highest student loan debt in the U.S. in 2020. The national average was $37,105.
• Credit scores: The average score is 731, which FICO rates as a “good.” It’s good enough to be the fourth-best among the 50 states, and 21 points higher than the national average.
• Identity theft: Vermont ranked 35^th in the nation in reports of identity theft fraud per 100,000 residents in 2020. That was a 48% increase over 2019 and represented about $3.6 million in losses. The average loss was $298.
• Bankruptcy and foreclosures: There were 375 bankruptcy filings in 2020, a figure that was lowered by pandemic policies. In 2019, there were 555 filings. Vermont had 846 foreclosures, a number lowered by Covid-19 eviction bans. There were 1,080 foreclosures in 2019.