Debt Relief

Alaska Debt Relief: Your Guide to State Laws and Managing Debt

Alaska debt

Alaska may be the final frontier, but it’s leading the nation when it comes to credit card debt, according to our analysis of Federal Reserve data (see table below). With its relatively higher cost of living, it’s not surprising that Alaska residents face higher-than-average auto loan and mortgage balances, too.

But there are tactics and organizations out there to help indebted Alaskans dig themselves out of financial trouble, as well as consumer credit laws that protect borrowers from unfair debt collection practices.

In this guide, we’ll cover what you need to know about debt relief options in Alaska, as well as debt management tactics. You’ll learn how to get that collections agency off your back, as well as whether or not filing for bankruptcy might actually be your best move. We’ll also cover the laws that protect you from predatory payday lenders, and dive into the best ways to repay your debts without taking out high-interest, short-term loans.

Debt in Alaska: At a glance

Alaska is in a bit of a bipolar position, debt-wise; it leads the nation in credit card debt, but its citizens carry one of the lowest student loan debt totals. Here are the most recent debt statistics for Alaska.

Alaska Debt
Type Per capita balance, 2018 U.S. per capita balance Rank out of 50 states*
Credit card debt $4,350 $3,220 1
Student loan debt $4,030 $5,390 47
Auto debt $4,920 $4,700 19
Mortgage debt** $41,960 $33,680 10
*No. 1 is highest
**First-lien debt only
Source: Federal Reserve Bank of New York, March 2019

Debt collection in Alaska

If your account goes into collections, a third-party debt collector may call you to pursue repayment. However, as in other states, Alaska debt collectors’ actions are limited by the Fair Debt Collection Practices Act, or FDCPA. These laws prohibit debt collectors from using tactics deemed unfair or deceptive in order to get you to remit a payment. Such disallowed behaviors include:

  • Using false representation or scare tactics, such as threatening criminal charges or repossession when those actions are not backed up by legal rights
  • Calling you before 8 a.m. or after 9 p.m. your time, without your expressed permission, or continuing to communicate with you after you’re stated, in writing, that you wish to cease communication
  • Falsely implying that they are attorneys or lawyers when they are not, or furnishing deceptive documents that have no real legal bearing

Debt collectors are also required to validate debts and provide a debt verification letter in the case of a dispute. If you submit a letter in writing to a debt collector asking for such verification, they can’t continue to communicate with you until they’ve provided that letter.

Responding to collection letters

If you’re receiving letters or calls from a collection agency, it’s important to remain calm and keep in mind the laws that protect you from unfair debt collection practices. You have a right to have your debt verified, so always request a verification letter before agreeing to any repayment program.

If a collector calls you directly, ask the representative for the name and contact information of the firm, as well as his or her first name. Gather details about the alleged debt they’re attempting to collect, including the amount owed, the name of the original lender, and when the debt was incurred. Request a written debt verification letter validating the information before you agree to make any payments — and keep in mind that you can often negotiate with debt collectors to pay a lump sum lower than the debt’s total.

You can submit a written letter to the collection agency asking for them to continue communications by mail only, if you’re sick of incessant phone calls — or even ask them to cease and desist communications overall. However, the FDCPA does not forgive legitimate debts you may owe, so if the debt collector does verify the debt, you’re still on the hook.

Who to contact if your debt collector is acting unfairly

If a debt collector is using unfair practices or misleading tactics, contact the Consumer Finance Protection Bureau to submit a complaint online, or call them directly at 855-411-CFPB (2372). You might also reach out to the Alaska attorney general, whose information you can find at the National Association of Attorneys General, or sue your debt collector at the state or federal level.

Understanding Alaska’s statute of limitations

If your debt is more than a few years old, it may be covered by an Alaskan statute of limitations — i.e. the amount of time in which a debt collector may legally sue you after the debt first fell into collections.  Different types of debt carry different year limits, as listed in the table below.

Alaska Statute of Limitations on Debt
Mortgage debt 3 years
Medical debt 3 years
Credit card debt 3 years
Auto loan debt 4 years
State tax debt 6 years

 

Although a statute of limitations doesn’t forgive a debt you owe, it does turn it into what’s known as a “time-barred” debt. While collectors may still pursue repayment for these debts, they have no legal right to actually take you to court.

That won’t stop them from calling you or sending you letters, however. And here’s the real kicker: if you pay so much as a single dollar on a time-barred debt, or even promise to do so, it can actually reset the clock on the statute of limitations. That’s why it’s imperative to verify the debt’s date and source of origination, and not to agree to any sort of payment without getting all the details first.

If a debt collector is attempting to collect payment on a debt that’s past its statute of limitations, write a cease and desist letter asking the collection agency to cease all forms of communication. You may also need to hire an attorney in the event that a debt collector sues you.

Alaska debt relief programs

If you find yourself in a sticky debt situation, there are nonprofits and debt relief organizations standing by to help. For example, the nationwide firms like MoneyManagement International can help you work with a credit counselor who can review your individual financial circumstances and get back on track.

There are plenty of other credit counselors on the market to choose from, too, but some of them, just like the collection agency you’re fighting, are just after your money. Always ensure you’re working with a reputable counselor; it’s helpful to check their background with the Better Business Bureau and look for an NFCC (National Foundation for Credit Counseling) accreditation.

In extremely convoluted credit cases, you may also find yourself in need of an attorney. The Northern Justice Project is a privately-held law firm, not a nonprofit — but it specializes in matters of consumer protection (including unfair debt collection practices) and frequently take on pro-bono work. You can also file consumer complaints directly with the state of Alaska using the forms and contact information listed here.

Payday lending laws in Alaska

Payday loans are short-term loans, usually incurring staggeringly high interest rates, meant to bail borrowers out of a financial pinch until their next payday. However, because these loans commonly carry interest rates of about 400%, it’s easy to come up short when it’s time to repay it — causing a quick and dangerous debt spiral.

That’s why many states have enacted laws limiting the ability of payday lenders to participate in “predatory” lending habits, capping the maximum loan amount as well as the charges a lender can levy for the advance. Here’s a recap of the payday lending laws governing short-term lenders in Alaska.

  • Maximum loan amount: $500
  • Finance charges: origination fees of $5 or less, and an additional fee that may not exceed $15 for each $100 of the loan or 15% of the loan’s total, whichever is less.

Alaska also enacts some other special payday lending laws to protect borrowers. For example, you have a right to rescind the loan, no questions asked and at no cost, at any time up until close of business on the business day following the day you initiated the loan. Furthermore, all fees must be clearly disclosed, both on visible signage inside the office as well as in a written statement, before a loan is issued — and if the lender fails to do so, they can’t collect those fees if the borrower defaults.

Even with these laws in place, payday loans are high-cost financial products that are not recommended, even in the case of an emergency. For context, even a high-interest credit card usually carries an APR of less than 30%, so payday lenders really take their borrowers for a ride.

Tips to tackle debt in Alaska

There are plenty of ways to tackle your debt without turning to a payday loan company or even hiring a credit counselor. Here are a few DIY options to consider if you’re facing a staggering debt total.

Consolidate your debt

Many borrowers find themselves drowning in debt in part because they’ve borrowed from so many sources. If you have several different bills to keep track of each month, it’s easy to miss one or fall behind on payments.

Debt consolidation is a debt-repayment tactic that involves taking out large line of credit to cover all your existing, smaller ones. You then use the money to pay off all those various debts — a maxed-out credit card, your auto loan, the personal loan you took out for medical bills, what have you — which leaves you only one lender to worry about.

It can also save you a significant amount of money on interest, depending on the interest rates you’re paying for your existing credit lines. Finally, paying off those multiple loans may actually improve your credit score, so long as you keep up with your payments on the new, larger loan.

Refinance

What did your credit score looked like when you first took out your mortgage or signed up for your auto loan? If you’ve improved your creditworthiness in the years since, you may be paying a higher interest rate than you have to.

Refinancing is a great way to reassess the situation and get a loan more in tune with your current credit score, which could save you money with a lower interest rate or monthly payment. You could refinance your mortgage or car payment, or even an unsecured personal loan. You can also refinance your student loan debt, though it may not be a wise move if you have federal loans, as this would mean forfeiting the ability to participate in repayment or forgiveness programs.

Use a balance transfer card

If you’re facing down a stack of credit card bills, opening a new line of credit might seem like the worst possible idea. But if you do it right, it could help you save a hunk of money in interest.

A credit card offering a balance transfer allows you to (you guessed it) transfer your existing balance or balances over to the new line of credit. This often comes with a promotional low interest rate, sometimes 0%, which means you could save a ton of money — so long as you’re able to pay it off in full before the promotional period runs out (usually within 12 to 21 months). Keep in mind these often charge transfer fees or 3 to 5%, so be sure it’s worth the upfront cost in the long-term so you don’t wind up in a vicious cycle with even more debt.

Filing for bankruptcy in Alaska

If you’re facing a truly catastrophic debt scenario, you might be considering filing for bankruptcy. And although bankruptcies do appear on your credit report, they don’t necessarily condemn you to a future of poor credit.

There are two common types of consumer bankruptcies, known as Chapter 7 and Chapter 13.

  • When you file for Chapter 7 Bankruptcy, your assets are liquidated and sold off in order to remunerate your debts, allowing you to start over with a clean state. Completed Chapter 7 bankruptcies stay on your credit report for 10 years.
  • When you file for Chapter 13 Bankruptcy, you may keep your assets, and will create a structured plan to repay all or part of your debts. Completed Chapter 13 bankruptcies stay on your credit report for seven years.

Our research has found that many who filed for bankruptcy had restored their credit score to 640 or higher within two or three years. That said, filing for bankruptcy is the nuclear option, and we recommend attempting other debt repayment strategies first.

To file for bankruptcy in Alaska, you’ll need to provide financial and identifying documentation to the United States Bankruptcy Court, District of Alaska. You can file with or without the help of an attorney, and the Court also offers some helpful resources for finding affordable help and pro-bono representation.

The bottom line

No matter where you live, it’s all too easy to fall into a debt spiral. But with the right resources at your side, it is possible to stem the tide and get back on dry financial ground. Choosing the best financial products from the start is a great way to get ahead of debt struggles — which is exactly why LendingTree is here to help.

The information in this article is accurate as of the date of publishing.

 

No matter your situation, we'll find the best solution together. Just a few clicks (or taps) away!