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

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Whether you live in the Great Plains, or in one of South Dakota’s hidden gem cities, there’s a lot to love in the state. The dramatic Black Hills, colorful badlands, and Mt. Rushmore sculpture all draw in millions of visitors each year, all of which help to support the state’s economy.

Unfortunately, many South Dakotans are also strapped with surmounting debt. While the state is better off than much of the country, there are still plenty of consumers who are in need of assistance with their monthly payments. This guide will cover laws that protect South Dakota consumers from predatory lenders and debt collectors, the statute of limitations on various types of debt in the state, debt relief and debt consolidation in South Dakota, and the best strategies for making your debt more manageable.

Debt in South Dakota: At a glance

South Dakota debt
Type Per capita balance, 2018 U.S. per capita balance Rank out of 50 states*
Credit card debt $2,840 $3,220 31
Student loan debt $5,170 $5,390 29
Auto debt $4,520 $4,700 29
Mortgage debt** $25,850 $33,680 33
*No. 1 is the highest
**First-lien debt only
Source: Federal Reserve Bank of New York, March 2019

Debt collection in South Dakota

All types of debt, whether auto loans, credit cards, or utilities, can be sent to collections if you miss your monthly payments. Collections agencies purchase unpaid debt from creditors for pennies on the dollar in exchange for the right to collect that debt from you.

These collections agencies will usually call and send letters frequently in an attempt to collect the debt they’re owed. They can also take you to court, and if they win, a debt collector may be allowed to garnish your wages or take a portion of your bank account balance in order to repay your debt. However, the following federal benefits cannot be garnished: Social Security, veterans’ benefits, military survivors’ benefits, Federal Emergency Management Agency (FEMA) disaster assistance, disability benefits and federal retirement benefits.

That doesn’t mean debt collectors can collect their money by any means necessary. In South Dakota, there are laws in place to limit the reach of debt collectors and protect consumers. If you’re dealing with debt collection in South Dakota, it’s critical that you understand your rights as a consumer.

Under the Fair Debt Collection Practices Act (FDCPA), a debt collector cannot make contact:

  • Before 8 a.m. or after 9 p.m.
  • With your places of work, if they’ve been told not to
  • With your family or friends, except for one time in order to inquire about your contact information
  • With anyone other than you, your spouse, or your attorney in order to discuss your debt
  • If they’ve been told, in writing, to cease communication

Furthermore, the law states that when a debt collector is speaking with you or your attorney, they cannot:

  • Make false statements, which include making false claims about who they represent, their company name, or the amount owed, and sending documents made to appear official or legal when they aren’t
  • Threaten you, which includes threats of arrest, threats to garnish your wages or seize your property unless they’re legally allowed to do so, and threats of legal action when they don’t intend to follow through
  • Harass you, which includes the use of profane language

Responding to collection letters

If you’re contacted by a debt collector, it can be tempting to ignore them or request that they cease contact. However, this can make matters much worse for you in the long run. Instead, follow these simple steps.

  1. Verify the debt.Ask for the agency’s name and contact information as well as the person you’re speaking with, and then ask for a debt validation letter, which should include the name of the original creditor and the amount owed. The letter will also include steps to take if you don’t think the debt belongs to you. A debt collections agency must send this to you within five days of initial contact.
  2. Take action.If the debt doesn’t belong to you, the validation notice you received should explain how to dispute it. Notify the debt collector that the debt isn’t yours and let them know, in writing, not to contact you again.If the debt does belong to you, you have several options. You can negotiate with the debt collector to settle your debt for a lower amount and forgive the rest, and then you can set up a payment plan that works for you or pay it off all at once. However, if the debt is a few years old, you might be approaching South Dakota’s statute of limitations on debt, as explained below. If this is the case, it can be wise to get in touch with an attorney to discuss whether or not you should make payments on the debt.
  3. Report any illegal behavior.If, at any point during this process, the debt collector does something you believe to be illegal, don’t hesitate to report it to the South Dakota Consumer Protection Office of the Attorney General. You can file a consumer complaint online. Don’t forget to keep copies of your complaint.

Understanding South Dakota’s statute of limitations

You should know how old your debt is and what the statute of limitations on it is. If the South Dakota statute of limitations on your debt has passed or is close to passing, this might impact how you choose to handle your debt.

South Dakota Statute of Limitations on Debt
Mortgage debt 6 years
Medical debt 6 years
Credit card 6 years
Auto loan debt 4 years
State tax debt 3 years (with some exceptions)

The statute of limitations on debt is essentially the amount of time that creditors and debt collectors have to pursue legal action against you in order to collect the debt they’re owed. Your debt isn’t erased once this time period has passed, though, which means collectors may still contact you. However, they are no longer able to take you to court and sue you once this time period has passed.

If you’re receiving frequent calls from a debt collector regarding a debt on which the statute of limitations has passed, keep in mind that they can’t do anything but continue to contact you, and consider requesting, in writing, that they stop contacting you if you don’t want to repay the debt.

For some consumers, choosing not to repay time-barred debt is the best option. It’s worth noting, though, that the debt doesn’t simply disappear. Collections accounts stay on your credit report for seven years from the date of the first missed payment.

South Dakota debt relief programs

If you’re dealing with unmanageable debt and debt collections, you might feel hopeless. However, there are a number of options for South Dakota debt relief and financial counseling, many of which are offered by nonprofits at no cost to you.

The National Foundation for Credit Counseling (NFCC) is the largest financial counseling nonprofit organization in the country, and it offers everything from credit counseling, bankruptcy counseling, and student loan counseling to debt management plans and credit report reviews. You can make an in-person or phone appointment with a certified counselor in your area through its website.

Lutheran Social Services of South Dakota also offers a range of financial education services to South Dakota residents. These include credit counseling, debt management programs, budgeting help, bankruptcy counseling, credit report consultations, and student loan counseling.

Nonprofit agency Consumer Credit Counseling of the Black Hills, located in Rapid City, also offers debt management plans that help you contact your creditors, develop a plan for repaying your debt, negotiate lower monthly payments, and consolidate your bills into a single monthly payment.

Make sure you do your research regarding debt relief programs and debt management plans before taking action, as they might not be the best option for you. While settling a debt can lead to lower monthly payments and more peace of mind, settled accounts typically have a greater negative impact on your credit score than accounts that are paid in full.

Payday lending laws in South Dakota

  • Maximum loan amount: $500
  • Maximum loan term: 6 months
  • Finance charges: 36% APR maximum

In 2016, South Dakota approved a ballot measure that put harsher restrictions on payday lending into place. Most notably, the measure placed a 36% annual percentage rate cap on loans offered by lenders licensed in the state of South Dakota. This rate cap caused most payday lenders to move out of the state, so you’re unlikely to find payday loans in the state of South Dakota now.

While it may still be possible to find payday loans with online lenders, it’s not advisable. Although these short-term loans can seem like a convenient quick-fix, their astronomical interest rates and predatory terms make it very easy to fall into unmanageable debt and can even lead customers to turn to bankruptcy.

Tips to tackle debt in South Dakota

Rather than resort to lenders with exorbitant fees that will only make your debt problems worse, consider some of the following strategies for paying off your debt.

Consolidate your debt

Debt consolidation is when you take out one loan to pay off all of your debts, consolidating multiple balances into one account. This makes it a popular option for people who want to streamline their monthly payments, but it can also help you lower your monthly obligation if you’re regularly coming up short on what you owe each month.

While consolidating your debt may make it easier to meet your monthly payments, it won’t necessarily save you money or get your debt paid off faster. In fact, debt consolidation might lead to a higher interest rate and a longer repayment period, meaning you’ll spend more money on interest over the life of the loan.


Auto loan refinancing, mortgage refinancing, and student loan refinancing are all common methods used to secure a lower interest rate or more favorable loan terms. Like debt consolidation, it involves taking out a new loan to pay off existing debt, although it doesn’t necessarily mean that all of your accounts will be consolidated into one monthly payment.

You’ll need to have good credit in order to receive a lower interest rate. If you aren’t approved for a new loan with better terms than your current one, it’s wise to continue paying off your existing debt and work on improving your credit score before refinancing. Also, keep in mind that if you’re considering student loan refinancing, it’s not always a great idea if you’ve got federal student loans, as this will mean forfeiting the option to participate in repayment plans and forgiveness programs.

Use a balance transfer card

Another option for paying down debt faster and at a lower rate, balance transfers involve opening a credit card with preferable terms and transferring an existing debt balance to that credit card. This method is usually done with a credit card that offers a 0% introductory APR on balance transfers, meaning that you don’t have to pay any interest on the balance during the promotional period, which is often the first 12 to 21 months. Most credit cards do come with a balance transfer fee, typically 3% to 5% of the amount being transferred.

With these introductory offers, it’s crucial to pay off the balance before the promotional period ends, or you’ll get charged the regular APR, which is likely higher than the rate you’re currently paying. This makes it a great option for balances you can pay off within a short period of time.

Another option if you need more time to pay off your balance is to get a credit card with a low ongoing interest rate and complete a balance transfer. Keep in mind that you’ll probably need good credit to qualify for a low interest credit card, and your income might impact the credit limit you’re offered.

Filing for bankruptcy in South Dakota

If you’ve considered all of the options above and still can’t make your monthly payments, it might be time to look into filing for bankruptcy in South Dakota. This decision shouldn’t be taken lightly, as bankruptcy does cost money, and it has a lasting negative impact on your credit that can bar you from borrowing money for years. That being said, it’s also a viable “second chance” for people without other options.

There are two main types of bankruptcy for individuals: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy is the most common, and rather than allowing you to work out a payment plan with your creditors, it involves selling your assets in order to repay your debts. On the other hand, Chapter 13 bankruptcy allows you to get assistance in setting up a payment plan with your creditors to have your debts paid off in three to five years, making it a potentially good option for people who are earning a stable income.

If you’re considering bankruptcy in South Dakota, it’s wise — and, in fact, required by law — to get credit counseling beforehand. The U.S. Trustee Program provides a list of approved credit counseling agencies in South Dakota. Bankruptcy is a big decision, so make sure to seek out education and support before making it.

The bottom line

While struggling with unmanageable debt is stressful, South Dakotans have a lot of options when it comes with dealing with debt collectors, seeking out debt relief, and lowering interest rates and monthly payments. The most important thing is to educate yourself and take action before your the problem gets worse.

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


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