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How to Get Debt Relief in Delaware

Dena Standley | October 19, 2022

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

You can find the financial relief you need.

Summary: If you're struggling with debt in Delaware, SoloSuit can help you find the relief you need.

Unsecured loans can quickly change from being your way out of a bind into a nightmare. Even the most financially conscious person can have unmanageable debt because of one financial hiccup. The extraordinarily high-interest rates on most payday loans add to debt woes for many who fall into the trap of needing these quick loans.

If you live in Delaware and find yourself in too many unsecured debts, you are not alone. Statistics show that the average Delawarean cardholder has a credit card debt of $6,736 as of early 2022. And with increasing inflation, high energy costs, and growing global instability, more and more people rely on credit cards.

If you feel overwhelmed with credit cards or other unsecured loans, you have a few options as a resident of Delaware:

  • Can you get a payday loan?
  • Could you convince your lender to settle?
  • What about debt consolidation?
  • Can you refinance your mortgage or car loan?
  • Is filing for bankruptcy an option in Delaware?

Let's find out.

Can you use a payday loan to relieve debt in Delaware?

Delaware has one of the most lenient laws governing payday loans. While some states have a maximum payday loan of $500, you can get up to $1000 in Delaware.

A payday loan is a quick loan you borrow and have to pay on your next payday. These loans don't come cheap. Delaware doesn't limit the interest a lender can charge on these loans. The lender decides what to charge you. 300% APR is considered a competitive rate. And it can go as high as 500%.

So if you are considering a payday loan to get you out of a fix, best read between the lines before you agree to it.

Payday loans are best to use when settling small debts. For example, if you suddenly found yourself unemployed but recently got a job, you can borrow the money to help you keep your repayments up to date until you get paid. It's advisable only to use payday loans if you know you can pay the high interest. Otherwise, you may quickly regret the decision as it will get you deeper into debt.

This table summarizes the terms for payday loans in Delaware.

Delaware Payday Loan Terms

Maximum amount

$1,000

Loan term

59 days or fewer

Charges

No regulation, but the lender must expressly spell the terms in the agreement


Source: Delaware.gov

For more laws on payday loans in Delaware, visit the official website.

Can you work out a debt settlement in Delaware?

You settle a debt by working out a repayment plan with your creditor. Most creditors prefer a lump-sum offer to settle because this reduces the chances of future defaults. You have two options:

  • Do it Yourself: You can work out a DIY settlement with the creditor. For this, you need to negotiate directly with the lender. After making an offer and the lender agrees, make sure you have the agreement in writing before settling the account. Having written communication will save you from future back-and-forths if the creditor tries to go back on their word.

    Working out a self-guided debt settlement can be tough, but it can be your only way out. Creditors are in business for money, and if you are offering them something, they may prefer to take it rather than risk getting nothing at all.

  • Hire a debt settlement company: These companies charge for their services. You pay them to help you negotiate with your creditor. Before they can represent you, you need to open a savings account where you deposit money monthly which they then use to settle your accounts. This option is great if you don't have the time to deal with creditors yourself. It can save you a ton of calculating and going over your accounts.

However, using debt settlement companies has its challenges. For one, you pay fees for the services when money is your problem in the first place. Also, the agency will delay payments on all your accounts for at least two months until they have a substantial amount in the new savings account to offer the creditors. All your accounts are delinquent as you wait, and your credit is destroyed. You may also start getting debt collection calls and threats of lawsuits.

Some debt settlement companies may require a large debt to work with you. Some only start taking clients with as high as $7500 in debt.

Whether you go with a debt settlement agency or choose to settle the debt yourself, remember that if you succeed and the creditor forgives more than $600, the IRS considers this amount taxable income.

Check out SoloSuit's video on debt settlement to learn more about settlement process

Try consolidating your debts into one

Debt consolidation is taking out one larger loan to pay off your current debts so that you are left with one account instead of several. It's great because it helps you get organized. Now you have just one instead of multiple due dates and different interest rates to keep up with. It gives you a sense of relief, but there's more to consolidating debt than meets the eye.

Debt consolidation promises you that you can borrow enough money to get out of debt. That doesn't sound right. However, if you are desperate, the promise may lure you into borrowing to pay the debt. In reality, you're still in debt.

When consolidating debt can work for you:

  • Get a lower interest rate on the new loan.
  • Make sure you are not accruing more debt on your now-paid accounts.
  • Pay the new loan as soon as possible.

Refinance your mortgage or car loan

A refinance is a new loan you borrow to pay the old one. It's like loan consolidation, except you can only refinance auto or home loans. If you are drowning in debt, a refinance may work for you as you sort out your financial house. You can free up some money to settle your other debts.

What if you have to file for bankruptcy in Delaware?

There's almost nothing good to say about bankruptcy. However, Delaware has some of the best terms for chapter 7 bankruptcy. You can keep your home if you have $125,000 or less in equity.

As the last of your last resorts, apply for bankruptcy if you really can't pay off your debts. If anything, it will give you a clean slate. Your debts will drop off, and you can start building your credit afresh. You may lose some of your property and find it hard to access credit, but it can be worth it for the peace of mind of not dealing with debt collectors and debt-collection lawsuits.

Applying for bankruptcy is daunting, but you can find help to deal with the process here:

  • National Foundation for Credit Counseling (NFCC)
  • The American Bankruptcy Institute (ABI)

You can find debt relief in Delaware

Delaware also has free community help for those struggling with debt.

  • Delaware Community Reinvestment Action Council (DCRAC): a non-profit organization that uses advocacy, education, legislation and outreach to ensure equal access to credit and capital
  • Stand by Me: state-funded program that offers free, private, one-on-one financial coaching from trained, skilled professionals who help you achieve your financial goals
  • Community Resource and Assistance Services: emergency financial assistance for rent, utilities, emergency shelter, and critical needs
  • Emergency Assistance Services: emergency financial assistance for rent, utilities, emergency shelter, and critical needs
  • General Assistance: a state-funded program that provides cash assistance to people who do not qualify for federally-funded programs like Social Security or TANF

Struggling with debt is not in the slightest way easy. If you evaluate your situation, you can find a way to get back control of your finances and build your credit score one step at a time. If you've been sued for debt in Delaware, Solosuit can help you respond to the debt lawsuit and win in court. Check out SoloSuit's services today to learn more about your options.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

Respond with SoloSuit

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