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Alabama Debt Relief: Debt Collection Laws and Settlement Options

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Alabama is a great place to live, but it has its share of debt problems like most states.

The average Alabamian owes $5,170 in auto and credit card debt. 18th highest per capita ratio across America!

This information comes from Lending Tree’s analysis of Federal Reserve Data which shows us that people living here struggle financially more than most.

If you are struggling with debt, you may be wondering what your best options are for relief. Alabama has specific laws regarding debt settlement, and many private companies offer settlement services.

This blog post will discuss Alabama’s debt relief laws and the different settlement opportunities available to Alabama residents.

Debt collection in Alabama

Debt collection is the process of pursuing payments of debts owed by individuals or businesses. In Alabama, debt collection is regulated by the Alabama Fair Debt Collection Practices Act. The Act prohibits debt collectors from using abusive, unfair, or deceptive practices when collecting debts.

For example, debt collectors may not threaten to use violence or harm the debtor. They also may not publish the debtor’s name on a list of people who have not paid their debts. In addition, debt collectors are prohibited from contacting the debtor’s friends, family, or employer in an attempt to collect the debt.

If a debt collector in Alabama contacts you, you have the right to request that the debt collector cease contact with you.

You also have the right to dispute the debt. If you believe that a debt collector has violated the Alabama Fair Debt Collection Practices Act, you may file a complaint with the Alabama Attorney General’s Office.

Some of the key provisions of the debt collection laws in Alabama include:

  • Debt collectors are not allowed to use threatening or obscene language when communicating with debtors.
  • Debt collectors are not allowed to make repeated phone calls or contact debtors at unreasonable hours.
  • Debt collectors cannot disclose the debtor’s personal information to third parties without the debtor’s consent.
  • Debt collectors must send written notice to debtors advising them of their rights under the law.

Understanding Alabama’s statute of limitations Debt Collection

Alabama’s statute of limitations on debt collection is six years. If you do not make a payment on your debt within six years of the last payment date, the debt collector can no longer take legal action against you to collect the debt.

However, this does not mean that your debt will be forgiven.

The statute of limitations only applies to the legal process of collecting a debt, not to the actual debt itself. This is an important distinction to understand, as many people believe that the statute of limitations absolves them of their debt entirely.

If you have unpaid debts that are more than six years old, you may still receive calls and letters from debt collectors.

However, they can no longer take legal action against you.

What is the statute of limitations on debt in Alabama?

Mortgage debt six years
Medical Debt six years
Credit card debt three years
Auto loan debt four years
State tax debt ten years

5 Ways to Pay off Your Debt in Alabama

Alabama residents who are struggling with debt have several options available to them. Here are five ways to pay off your Debt in Alabama:

1. Consolidate your Debt

Debt consolidation is when someone takes out a new loan to pay off multiple existing debts. This can be an effective way to manage debt, as it can potentially lower the interest rate and make payments more manageable.

However, there are several things to consider before consolidating debt, such as the total amount of debt, the interest rate on the new loan, and the terms of repayment.

Debt consolidation can be a helpful tool for managing debt, but it is essential to do your research and understand the pros and cons before taking out a new loan.

How soon can you be debt free?

2. Refinancing

refinancing your existing home or car loan can be a great way to save money on interest payments. When you refinance, you take out a new loan with more favorable terms than your current loan.

This can help you save money on interest payments and pay off your debt more quickly. Refinancing is also an excellent way to consolidate multiple debts into one monthly payment.

If you have multiple loans with high-interest rates, refinancing can help you save money and simplify your finances. Before refinancing, it’s essential to compare offers from various lenders to make sure you’re getting the best deal possible. 

3. Use a balance transfer card

A balance transfer card can be an excellent tool to help manage debt. You can save money on interest payments by transferring the balance of an existing loan or credit card to a balance transfer card with a lower interest rate.

In addition, by making regular payments on the balance transfer card, you can pay down the principal balance more quickly.

As a result, balance transfer cards can help you get out of debt faster and save money in the long run. When choosing a balance transfer card, it is important to compare interest rates and fees.

Some cards charge a balance transfer fee, negating the savings from a lower interest rate. In addition, some cards have introductory rates that revert to a higher rate after a certain period of time.

4.Filing for bankruptcy

If you’re considering bankruptcy in Alabama, it’s essential to understand the bankruptcy process and what options are available.

Bankruptcy can be a complex and daunting process, but it can be an effective way to get a fresh start with the proper guidance. Two types of bankruptcy are available in Alabama: Chapter 7 and Chapter 13.

Each type of bankruptcy has its eligibility requirements and benefits, so it’s essential to choose the right one for your situation. bankruptcy can be a difficult decision. Still, it may be the best option if you’re struggling to make ends meet.

5. Alabama debt relief or debt settlement

Debt relief or debt settlement companies offer various services to help consumers get out of debt. The most common type of debt relief is debt settlement, which involves negotiating with creditors to lower the debt owed.

Debt relief companies may also offer other services such as consolidation, counseling, and education. While debt relief companies can provide much-needed assistance, it is crucial to choose a reputable company that will work in your best interest.

Be sure to research any debt relief company you are considering before deciding.

3 Trusted Debt-Relief Companies in Alabama

Individuals and families may struggle with personal debt, but Alabama has resources to assist them.

There are national debt relief options as well, including, but not limited to the following:

  • National Debt Relief can help you with credit counseling, debt consolidation, and debt settlement and help negotiate settlements with creditors and collection accounts. It typically charges 20% to 25% of your monthly payment once it settles.
  • CuraDebt is a debt settlement company that assists individuals and small enterprises with IRS and state tax settlements. It usually charges a 20% fee on your monthly payment when it completes a settlement.
  • Freedom Debt Relief offers various services, including debt consolidation, debt settlement, and credit counseling. The company also provides a money-back guarantee if you are not satisfied with their service. Freedom Debt Relief is accredited by the Better Business Bureau and has an A+ rating.

Finally

If you’re struggling to pay off your debt, don’t worry. You’re not alone. Tens of thousands of Alabamians are in the same boat. But there is hope.

There are several ways to get out of debt and start living a life free from financial stress. We’ve outlined five of them here, but if you want more personalized advice or explore other options, call now to speak with a debt advisor who can help get you back on track financially.