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North Dakota Debt Relief: Your Guide to State Laws and Managing Debt

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With one of the lowest unemployment rates in the United States — 2.3% as of March 2019 — and a higher-than-average 2017 median household income, North Dakota seems to offer a pretty positive financial climate for its residents.

Still, debt is a reality for many in North Dakota, where folks carry an average of $3,100 in credit card debt per capita (23rd in the nation) and rank 8th for highest auto loan debt ($5,290).

If you’re on the high end of the North Dakota debt spectrum, it’s crucial to understand all the resources and tools available to residents, as well as the laws that govern various debt collection and debt relief agencies there.

Debt in North Dakota: At a glance

North Dakota debt
Type Per capita balance, 2018 Rank out of 50 states* U.S. per capita balance
Credit card debt $3,100 23 $3,220
Student loan debt $5,510 19 $5,390
Auto debt $5,290 8 $4,700
Mortgage debt** $27,470 28 $33,680
*No. 1 is highest
**First-lien debt only
Source: Federal Reserve Bank of New York, March 2019

Debt collection in North Dakota

In North Dakota, debts can be turned over to debt collectors even if you are making regular payments each month. Debt collectors have several federal laws they need to comply with, including:

  • They can’t try to call you at places or times deemed inconvenient, which includes calling before 8 a.m. or after 9 p.m.
  • A debt collector can’t discuss your debt with anyone other than you, your spouse or your attorney. And if you have an attorney, the debt collector has to contact them.
  • They can’t pretend to be an officer of the law or an attorney.
  • Debt collectors may be allowed to contact you, but they aren’t allowed to harass you. That means they can’t use obscene language, threaten you with violence or call you over and over in an attempt to annoy you.
  • No debt collector can call you at work if you tell them not to.
  • They cannot lie. That means they can’t misrepresent the amount you owe, make false claims of arrest or legal action or lie about being representatives of the government.
  • Debt collectors are required to uphold fair business practices. That means no early depositing of postdated checks, no collecting fees that the original contract or state laws don’t permit and no threatening to take property from you without legal grounds.

Responding to collection letters

When a debt collector contacts you, before doing anything, you’ll want to check with the North Dakota Department of Financial Institutions to make sure they are licensed. Once you verify this, the next step is to validate the debt. You’ll want to do this quickly because in some cases, you may have only 30 days from the date you’re initially contacted.

Make sure that the debt does belong to you and that it’s not something you paid already. To do this, you can write the collection agency and request information about the original creditor and details surrounding the original charge.

If the debt isn’t yours or if you’ve already paid it, you can inform the collector. You can also write to the collection agency if you want them to stop contacting you, to contact you through your lawyer or to set parameters around how they can contact you. The Consumer Financial Protection Bureau (CFPB) has sample letters you can use for each of these situations. If a debt collector violates any of the rules they are supposed to follow, you can call or email the North Dakota Department of Financial Institutions.

Understanding North Dakota’s statute of limitations

The statute of limitations on a debt determines the length of time creditors have to pursue legal action for collection of an unpaid debt. Once the limit is reached, while they may no longer be able to take you to court for the debt, creditors can still contact you to attempt to collect payment.

North Dakota Statute of Limitations on Debt
Mortgage debt 10 years
Medical debt 6 years
Credit card 6 years
Auto loan debt 4 years
State tax debt 6 years (10 years if no return was filed)


A debt’s statute of limitations can be reset, referred to as a time-barred debt, when you take certain actions like making a payment. So be very careful before making payments on older debts, as you don’t want to reset that clock. Consult a consumer law attorney or credit counselor if you’re unsure.

North Dakota debt relief programs

If you’re in North Dakota, you can work with national credit counseling and debt management agencies that provide free or low-cost help to those in need, or you can choose The Village Family Service Center, a North Dakota–based center with 7 offices across the state. In this state, service providers giving credit counseling services are required to have a surety bond, which serves as a guarantee of their performance. The bond is used to benefit anyone who uses a credit counseling service and suffers damages caused by them.

North Dakota also lays out some requirements regarding fees of and payments to credit counseling services. The service is limited to a maximum $50 origination fee, and they are permitted to take up to 15% of the amount a creditor deposits with them as a partial payment for their services. The remaining amount must be distributed to the creditor’s debtors within 45 days of deposit.

Residents who need to file a complaint can do so by filling out the online form or contact the North Dakota Department of Financial Institutions via phone, email or mail.

Payday lending laws in North Dakota

  • Maximum loan amount: $500
  • Maximum loan term: 60 days
  • Maximum finance charges: 20%

Many people struggling with debt turn to payday loans to help them bridge the gaps between paydays or to pay for unexpected expenses that pop up. Payday loans should not be anyone’s first choice when it comes to debt solutions, but if it’s your only option, it’s important to make sure that the lender you choose follows North Dakota’s payday lending laws.

One requirement North Dakota has is that payday lenders must state the total dollar amount the borrower will spend on fees rather than just show it as an interest rate. This is extremely helpful because it allows borrowers to consider the full amount of the loan, which is hard to do when interest is just expressed as a percentage.

Tips for tackling debt in North Dakota

No matter what might be behind your desire to reduce debt, there are a variety of options to consider before taking that step. Below are just a few of the possibilities you can choose from, depending on your personal situation:

Consolidate your debt

When you have unsecured debt that you want to corral into a single balance, lower interest rate and single monthly payment, debt consolidation might be in order. These are loans taken for the purpose of paying off other debts and getting all your credit card, medical and other unsecured debt into a single monthly payment.

When taking this step, remember that you’ll be erasing your credit card balances, so make sure that you have a plan to avoid taking on new debt. Also, make sure that the interest rate on the loan is low enough to save money.


Refinancing your home to get a lower interest rate can reduce your monthly bills and save you money in interest over the years. Additionally, if you have equity in the home, you may be able to pull those funds out and use them to pay off other debt, essentially consolidating all your debt under your mortgage. When doing this, remember that your home is securing the loan, so you want to make sure that you can continue to handle the payments.

Refinancing your auto loan with a new auto loan with a reduced interest rate or longer term in order to reduce payments can be an especially good idea for those whose credit scores have increased since they took out the original loan. Alternatively, you may be able to secure a lower-interest personal loan to pay off the auto loan debt. Just remember, if you refinance to a longer term with the same interest rate, the actual cost paid for the loan increases.

You can also consider refinancing your student loan with a specialized education loan or a personal loan with a lower interest rate than the original student loan. In some cases, when a refinanced loan’s new term is shorter than the original, monthly payments might be higher than previously. Before refinancing to a shorter term, make sure the payments are well within your budget. Also, keep in mind that when refinancing you lose access to certain federal protections, such as income driven repayment plans, so make sure that is something you are comfortable with.

Use a balance transfer card

If you have a lot of credit card debt, taking advantage of an interest-free or low-interest balance transfer card can be a suitable strategy for gaining some time to aggressively pay off the debt without accruing many (or any) finance charges. Note that these interest-free offers are generally for those with good credit scores and offered for a limited time period. There can be a balance transfer fee that needs to be evaluated to ensure you’re saving money with the move.

Budget and payoff strategies

Adjusting your budget to reduce overall spending so that you have more money to put toward your debt gives you the opportunity to integrate a variety of debt-repayment strategies including:

  • Snowball method: Pay off debts in order of size, from smallest to largest. Start by making aggressive repayments to debts with small balances while maintaining minimum payments on larger debts. As the smaller debts are paid off, attack the next largest debt.
  • Avalanche: Use the same method as above, but instead of focusing on repayment in order of debt size, pay off in order of interest rate — going from highest to lowest.
  • Tsunami: Same method as above, but prioritize debt repayment in order of how much each debt stresses you. This method ignores balances and interest and allows you to free yourself in the order of mental burden a debt causes.

Filing for bankruptcy in North Dakota

If you can’t afford to consolidate your debt and make payments, and debt collection calls are putting a strain on your life, you might want to consider bankruptcy.

For those who qualify, Chapter 7 bankruptcy can discharge your debts through the sale of your assets. For those who don’t qualify for Chapter 7 or who want to protect underlying collateral, Chapter 13 allows you to create a payment plan for your debt.

Both forms of bankruptcy can negatively affect your credit, and there is mandatory credit counseling required for each. In North Dakota, you can go through The Village Family Service Center, the only credit counselor approved to provide required pre-bankruptcy financial counseling in North Dakota. To learn more about filing for bankruptcy there, visit the U.S. Bankruptcy Court’s North Dakota District website.

The bottom line

Debt may be a scary four-letter word, but it’s one that you can manage by using the many tools at your disposal as a North Dakota resident. Once you fully understand your rights and the various laws surrounding debt and its collection, you can ensure that you’re being treated the right way and that you get out from under your debt in the most effective way possible.

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


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