Alaskans saw their collective credit scores plunge and their credit card bills soar to the highest amounts in the U.S. in 2021, but still there are encouraging signs “The Last Frontier” is poised to turn things around.

According to Alaska’s Department of Labor & Workforce Development, a whopping 27,200 jobs disappeared from the Alaskan landscape in 2020 — falling to levels not seen since 2003. However, trends show that the state’s job market started to thaw in 2021 and hopes are there for more rebirth in 2022.

Naturally, the industries hit the hardest by the effects of the 2020 pandemic are the ones showing the most growth in 2021. The leisure and hospitality industry, pummeled by the absence of a tourist season, gained back approximately 3,500 of the 9,600 jobs lost in 2020. Other hard-hit industries such as transportation, warehousing and utilities are expected to return about half of the 3,600 jobs lost, according to the Labor & Workforce Development report.

“Despite the upheaval, I am hopeful about the days ahead,” Labor Commissioner Dr. Tamika L. Ledbetter wrote. “It will take enormous effort to help those who have fallen behind of closures and job losses, but I am confident that the worst is behind us. Helping Alaskans get back to work is the answer to reinvigorating the economy and getting Alaska back to normal.”

Sadly, the new “normal” for many Alaskans is one with soaring credit card bills and financial concerns moving forward. Fortunately, there are private and governmental agencies that are in place to help Alaskans in need of financial assistance.

Debt Relief Options for Alaska residents

InCharge Debt Solutions debt management program is an excellent option for consumers who find themselves financially struggling. The certified credit counselors at InCharge will help you consolidate credit card debt, lower interest rates and create payment plans that best suit your finances.

Credit card companies charged consumers a whopping 16.5% interest rates in 2021. Consumers who are having trouble paying those monthly credit bills can see their interest rates soar to 25% or more if they miss payments. InCharge works with the credit card companies to help them get those interest rates down to around 8%, sometimes lower.

It is InCharge’s hope to help customers completely rid themselves of credit card debt in 3-5 years. However, clients must be willing to stick to a strict spending budget in order for their credit card debts to be wiped out within the 3-to-5-year window.

InCharge will handle your monthly payments and distribute them to creditors in previously agreed upon amounts. InCharge consumers are able to apply for this easy-to-navigate plan over the phone or online.

Credit score is not a factor in enrolling in the plan. Even potential clients with lower credit scores can still qualify for debt-management plans.

Here are some of the other assistance programs that are available to Alaskans facing financial problems:

  • Debt Settlement – This option can be used for credit card relief, personal loan forgiveness or medical bill debt. It can be beneficial because it could allow you to pay less than the original amount owed. Creditors must agree to a payment amount that ultimately settles the owed debt. While this usually is the best option to assist in the elimination of debt, it can result in future financial problems. This debt-relief option will likely help solve your pressing financial issues in the short term, but it will have negative long-term effects going forward. Choosing this option means record of the debt settlement will be on your credit report for seven years, and mostly likely it will have a negative impact on your ability to get credit for major purchases in the future.
  • Credit Card Debt Forgiveness – This is offered by a select group of nonprofit credit counseling agencies. The difference between this and traditional debt settlement is that the creditors have agreed in advance to reduce the amount owed by 40%-50%. Consumers can start reducing the amount owed with the first monthly payment and eliminate the debt in 36 months.
  • Debt Consolidation Loan – If your credit score is in good standing, you could be eligible to get a low-interest debt consolidation loan. You will still be required to pay the consolidation loan, but you won’t be penalized so severely by credit card companies’ high interest rates.
  • Bankruptcy – Filing for bankruptcy will help you eliminate your credit card debt, but this option should only be used when the other options have been exhausted. Filing for bankruptcy will hurt your credit score for the next 7-to-10 years, which likely hurt your chances of getting a loan to buy a home or vehicle. Before choosing to file for bankruptcy, contemplate the damage that this will have on your credit score in coming years.
  • Do it yourself plans If you are the type of individual who is brave and carefree and would rather a do-it-yourself plan, you might contemplate doing a DIY-style debt management program. DIY plans will help you in building a plan that better suits your personal financial needs.

Alaska Debt Resources

Alaska residents who are having a hard time finding work, housing or paying their monthly bills could be eligible for financial assistance through a variety of federal and state programs. Here are some of the services available to Alaskans:

  • HUGSS and Coats for Kids: The Helping Us Give School Supplies and Coats for Kids program is sponsored by The Salvation Army and it hopes to provide every Alaskan child in need of a coat in the winter. Alaskans can donate new or gently used coats at their local Fred Meyer stores at the Salvation Army Corps. All sizes are needed, including large, XL and XXL, because there are older kids in need of warm jackets as well.
  • Meals on Wheels: This state-funded program is available to all individuals who meet certain financial qualifications. Citizens in Fairbanks interested in the program can fill out application forms at the Senior Center. The program is in great need volunteer drivers to deliver meals to people mostly confined to their homes because of dire financial circumstances or debilitating illnesses.
  • Older Alaskans Program: The OAP provides home-delivered meals and group meals to sites for Alaskan seniors. For some seniors, home-delivered meals are a lifeline to the outside world. The meals provide much of the daily allowances for nutrition needed on a daily basis.
  • Rural Transportation Assistance Program: The mission of the RTAP is to promote the safe delivery of transportation in rural areas so that public and private resources can be used more efficiently. The federally funded RTAP provides a source of funding to help in the design and implementation of training for transit operators in rural areas.
  • General Relief Assistance: The GRA provides a variety of services for Alaskans, but it focuses primarily on shelter, utilities, food, clothing and or burial assistance.
  • Golden Valley Electric Assistance: The GVEA’s Benevolent Fund came to the aid of families in Alaska that had their wages or work hours negatively impacted by the COVID-19 pandemic. The Benevolent Fund was there to help members keep their electricity on during difficult times as the temperatures dipped. The Members Serving Members program was instituted to provide financial assistance for electric bills.
  • Power Cost Equalization Program: The PCE provides economic assistance to communities and residents of rural electric utilities where the cost is significantly higher than in other urban areas of Alaska. The PCE fund was created to provide long-term and stable power cost equalization in areas of the state that typically face higher costs than in urban areas.
  • Low-Income Heating Assistance: The HAP was put in place to help with the general welfare and health of Alaskans by offsetting the cost of home heating. Applications for 2022 must be sent by email and they must include all of the required signatures and financial information.

Alaska Debt Statistics

Here is a look at some of the large amounts of debt that Alaskans are carrying after an extremely difficult couple of years because of a variety of factors.

  • Mortgage Debt: Alaskans saw their average mortgage balances rise from $223,167 in 2019 to $227,960 in 2020 — a 2.1% climb. That hike was tied for the 15th lowest jump in the nation in mortgage balances. However, the $227,960 still owed on mortgages, is the 14th highest total in the nation.
  • Auto loan debt: The news isn’t quite so good as it relates to auto loan debt in The Last Frontier. The average amount of auto loan debt jumped from $21,876 in 2019 to $23,158 in 2020 among Alaskans. That 6% hike in the amount owed from 2019 to 2020 is tied for the second largest year-over-year jump in the nation. The $23,158 owed in 2020 among Alaskans is now the sixth highest total in the nation.
  • Credit card debt: Things look somewhat dire in Alaska in terms of credit card debt. Alaskans have, on average, $8,026 in credit card debt — the most of any state in the nation. That total is well above the national average of $6,194.
  • Household debt: Despite their recent woes with credit card debt, Alaskans have done a great job of keeping their total debts low. On average, Alaskans owe $57,000.
  • Student Loan debt: Alaskans who needed to go into debt to get through college owe an average of $27,852. That number ranks as the 22nd lowest total of student debt for any state. Collectively, Alaskans owe $2.1 billion in student loan debt — the second-lowest amount in the country.
  • Credit scores: After their average credit score jumped from 707 to 714 from 2019 to 2020, Alaskans have seen their credit standing sag thus far in 2021. According to Fortune, Alaskans saw their credit scores plunge to 692 in 2021.  
  • Identity theft: According to 2021 data, Alaska is the safest state in the country for identity theft. As of September of 2021, there were only 96 reported cases per 100,000 residents. To put that into perspective, residents of Kansas are 10 times more likely to become victims of identity theft than Alaska residents.
  • Bankruptcy and foreclosures: As of September of 2021, Alaskans had the fewest bankruptcies in the nation at just 107. To put that number into perspective, California had 18,817 bankruptcies filed by September of 2021. As for foreclosures, Alaskans have proven less likely to face these issues than the rest of the country. The delinquency rate in the first quarter of 2021 in Alaska was 5.4% — a better rate than the national average of 6.1% on foreclosures.

Sources

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Hogue, J. (2020, November 3). Americans in These 13 States Owe More Than They Make a Year. Retrieved from https://peerfinance101.com/average-debt-by-state-loans/

Lembo Stolba, S. (2021, February 15) Mortgage Debt Sees Record Growth Despite Pandemic. Retrieved from https://www.experian.com/blogs/ask-experian/how-much-americans-owe-on-their-mortgages-in-every-state/

Lembo Stolba, S. (2019, August 12) Top 10 States with the Highest Average Auto Loan Debt. Retrieved from https://www.experian.com/blogs/ask-experian/research/states-with-the-highest-average-auto-loan-debt/

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White, A. (2021, February 3) Minnesota residents have the highest average credit score — here’s how other states compare. Retrieved from https://www.cnbc.com/select/average-credit-score-by-state/

Leonhardt, M. (2021, September 8) Credit scores hit a 13-year high, but big disparities remain. See how your state fares. Retrieved from https://fortune.com/2021/09/08/credit-scores-by-state-map-13-year-high/

N.A. (2021, September 15) 50 Shocking Identity Theft Statistics — 2021. Retrieved from https://safeatlast.co/blog/identity-theft-statistics/

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N.A. (2021, June 8) An Update On Alaska’s Housing Market: Delinquencies and Foreclosures; Sales and Inventory. Retrieved from https://www.ahfc.us/blog/posts/update-on-alaska-housing-market-delinquencies-foreclosures-sales-inventory