3 signs you need debt relief for 2025
Optimism surrounding a declining inflation rate has waned in recent months as Americans saw inflation rise in October, November and December. That increase partially came during the Federal Reserve's latest interest-rate-cutting campaign, which now seems halted until additional progress is made in lowering the inflation rate to the Fed's target 2% goal. For now, then, prices on many common items are likely to stay high and savings secured via lower borrowing interest rates will be delayed, perhaps until much later in 2025.
Against this backdrop, many Americans may find themselves looking for ways to both reduce their debt and make ends meet. Fortunately, multiple debt relief strategies can work both independently and in conjunction with one another. But how do you know if your financial situation warrants such specific action? Below, we'll break down three signs that you may need debt relief this year.
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3 signs you need debt relief for 2025
Think a debt relief service, which ranges from everything from credit card debt forgiveness to debt management programs, doesn't apply to your situation? Here are three signs you may need the help this year:
You have above-average credit card debt
The average American has around $8,000 in credit card debt currently. So, if you owe $9,000 or even more, you likely will need to explore your debt relief options. If the thousands you owe to your credit card lenders isn't enough of an incentive to take action, consider that the average credit card interest rate is sitting around 23% now, a record high. That's $23 for every $100 borrowed. Can you truly afford to pay that on a potential five-figure sum of credit card debt? And should you even try, especially if you can qualify for credit card debt forgiveness? This may be the only sign you need that it's time to take action.
Explore your credit card debt forgiveness options now.
You're considering using your home equity
In some cases, using your home equity via a loan or line of credit, to consolidate or pay down your debt may make sense. But this simple consideration is typically a strong indicator that you need, instead, debt relief help. Your home is likely your most critical financial asset. And borrowing from it comes with risks. If you're unable to repay your full home equity loan or HELOC, you could risk losing your home to the lender in the process. So carefully consider this option before proceeding. And if you're unsure of your ability to repay it in full, look to debt relief alternatives like a debt consolidation loan which will operate similarly to a home equity loan, without the inherent risks that come with putting your home up as collateral.
Collection calls have started
You won't receive a collection call if you miss your payment deadline by a day or so. But if you've already started getting collection calls, that means you're likely 90 days or more past due. It also means that you likely owe more than that principal amount, as interest and fees have since been tacked on – and will continue to be until you develop a firm, agreed-upon repayment strategy. So if the collection calls have already started and you're beginning to feel harassed it's important to understand what collectors can and can't do in this process. But it's equally important to come up with a solution. Debt relief servicers can help.
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The bottom line
The above list is not exhaustive as there are plenty of signs that your debt has gotten out of control and that you need the help of a professional servicer. But if one or more of the above signs pertain to you, consider acting promptly. Debt can compound, additional fees will be added and relief will take time to be effective. It's beneficial, then, to start the process now, at the start of 2025, and diligently work toward regaining your financial freedom this year.
