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Indiana debt relief resources
When it comes to finding legit debt relief, Hoosiers are well protected by state law.
Indiana requires debt relief companies to be licensed — and it lays out what fees can and can't be charged when you sign up for debt settlement.
Debt relief regulations in Indiana
Debt management and settlement companies are regulated by Chapter 29 of Indiana Code Title 28. This states that all debt settlement companies and individuals practicing debt settlement must be licensed. It also regulates the fees a debt settlement company can charge.
A debt settlement company must provide a budget analysis and an affordable payment plan before you enroll in a program. It must also determine which of your creditors would be willing to participate in debt settlement negotiations. You should receive a copy of these plans with or without signing up for a program.
In addition, you must be given information about how debt reduction can affect your taxes.
Fees can't be charged until you've made at least one payment toward a creditor under a plan. This means that you must agree to a settlement and start making payments to be charged for debt settlement.
- Setup fees. A debt settlement company can charge you up to $50 for consultation, account setup and pulling a credit report.
- Monthly service fees. A debt settlement company can charge you up to 15% of the amount you pay toward your creditors each month or $75, whichever is less. At minimum, you can be charged $5 a month.
- Close-out fees. Once you finish a program or cancel your agreement, a debt settlement company can withhold $100 from your trust account as a close-out fee.
- Returned payment fee. You may be charged a fee up to $25 for each returned payment from a bank for a dishonored check or electronic transfer.
If you or the debt relief company decide to stop the program, the funds in your trust account must be returned to you, minus the $100 close-out fee.
There are no late fees listed in Indiana's regulations. However, an agreement may be considered canceled if you miss a payment by more than 90 days.
To prevent cancellation, you can submit a letter of continuation that includes a detailed explanation for the missed payment. This can only be done once every 12 months, and any future missed payments may still be considered reason to cancel your agreement. In addition, you can't file a letter of continuation during the first six months of your program.
Debt settlement isn't the only option for debt relief — although it is highly regulated in Indiana. You may also want to consider one of these options if you're overwhelmed by debt:
- Credit counseling. The Department of Justice has compiled a list of federally approved credit counseling agencies in Indiana. Although they won't necessarily reduce the amount you owe, they can help you negotiate with creditors and help you develop a budget.
- DIY negotiations. You don't need to rely on a debt settlement company. You can reach out to your creditors yourself to discuss any financial struggles you've been facing. Many creditors are willing to negotiate, settle or come up with an alternate payment plan.
- Debt settlement. Debt settlement, also called debt management, is an expensive service that negotiates with your creditors on your behalf. While you can do this yourself, debt settlement companies often specialize in helping people with large amounts of debt.
- Debt consolidation. If you have good to excellent credit and aren't behind on your payments, you may want to consider a debt consolidation loan. These are unsecured options that combine your payments into one monthly bill, sometimes at a lower interest rate.
How to find a legit debt relief company
Indiana requires its debt relief companies to be licensed by the state. There is also a list of companies and individuals banned from offering debt relief managed by the Federal Trade Commission (FTC). In general, be on the lookout for upfront fees and companies that ask for sensitive personal information — like your Social Security number or bank account numbers — before offering a quote.
Legitimate debt relief companies will likely be accredited by industry organizations like the American Fair Credit Council (AFCC) or the International Association of Professional Debt Arbitrators (IAPDA). They should have pages on the Better Business Bureau and Trustpilot that list recent customer reviews of their services. And finally, the company's customer service representatives should be open about the potential terms of your payment plan and the types of fees you will have to pay.
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Indiana debt statistics
A study published by the Federal Reserve reported that Indiana had an average debt-to-income (DTI) ratio of 1.09 to 1.24 in the first quarter of 2020 — higher than surrounding states. A DTI ratio of above one indicates that the debt outpaces income. In the case of Indiana, it does so at a rate that maxes out at the third lowest.
The average consumer debt for Americans was $90,460 in 2018. But Hoosiers have some of the lowest mortgages in the US, according to data from Experian. Borrowers in the state also carried lower consumer debt on average in 2019.
- Mortgages: $120,354
- Credit cards: $5,254
- Store credit cards: $1,099
- Student loans: $31,992
Other consumer debt, like personal loans and car loans, weren't broken down by state in Experian's report.
Indiana has good protections for its citizens — which may help you find legitimate debt relief. You can read our guide to debt relief to learn more about your options.
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