Debt Relief Options in Minnesota

Where do you go when you are in debt while living in Minnesota? In this article you will find debt relief programs in Minnesota and learn about the statute of limitations, and debt collection laws.

Choose Your Debt Amount

Debt Statistics in Minnesota







Debt Relief Programs in Minnesota

There are banks, credit unions, online lenders, and debt-relief companies (for-profit and nonprofit) in Minnesota that specializes in helping consumers pay off credit card debt. These companies provide five different types of programs to help with this kind of debt.

The five programs include debt management programs; debt consolidation loans; debt settlement; nonprofit debt settlement and bankruptcy. Each program has benefits and negatives associated with it.

Here is an outline for each program:

Debt Management Program

Debt management plans are an efficient way to pay off high-interest, unsecured debts without having to take out a loan. If you qualify, these plans reduce the interest rate you pay to around 8% (sometimes lower) and offer affordable monthly payments that eliminate the debt in 3-5 years.

These plans are offered by nonprofit credit card counseling companies, who do an in-depth analysis of your income and expenses to create a budget that includes fixed monthly payments on your debt. The counselors are certified by the National Foundation of Credit Counseling; and their certification that is renewed every two years

Your credit score will drop slightly at the start of debt management programs because you are asked to close credit cards, but as long as you make on-time payments and pay off the total amount of what you owe, your credit score will improve dramatically over time.

» Where to find debt management programs? – Nonprofit credit counseling agencies offer debt management programs that you can enroll in over the phone with a credit counselor or online. The counselors will assist with creating an affordable budget that includes payments toward eliminating credit card debt.

» Who is right for debt management programs? – If you have high-interest credit card debts that you are unable to pay off, a debt management program is a great option. Consumers should keep in mind that interest rate concessions made by lenders will be void if any monthly payments are missed.

Debt Consolidation Loan

Debt consolidation loans are a financial strategy to pay off multiple high-interest debts with a single, low-interest loan. These loans simplify bill paying on unsecured debts like credit cards, and medical bills, or personal loans.

Having a good credit score is vital for receiving favorable interest rates on a debt consolidation loan. A score above 700 is ideal, but you can still get fair rates with a score of 670-699. If you have a score under 670, the interest rates most likely will be too high to be any advantage.

» Where to find debt consolidation loans? – Online lenders, credit unions, and banks offer this type of debt relief. To find the best rates, consumers should shop around and compare lenders.

» Who is right for debt consolidation loans? – Debt consolidation loans may be a good option for you if you have a credit score over 670 and the discipline to stop using credit cards.

Debt Settlement

Debt settlement is paying less than what is owed on credit card debt. Although debt settlement seems enticing with promises of 50% or more reductions to debt, the claims are rarely true and could worsen your situation.

Even though it is possible to negotiate yourself and not pay settlement companies’ fees, it is a huge risk. Most likely, the creditor or debt collection agency has encountered inexperienced consumers many times and knows how to pressure them into paying either the full debt or a large percentage of it.

Problems start when debt settlement companies advise consumers to stop credit card payments, which leads to late fees and increased interest payments. Debt settlement hurts credit scores and in some cases can drop them over 100 points.

» Where to find debt settlement? – Consumers should search for companies that specialize in debt settlement because these companies can negotiate with creditors to agree on a reduced sum.

» Who is right for debt settlement? – If you are no longer able to make regular payments to your credit card and feel that bankruptcy is the only other option, debt settlement may be right for you. Consumers should note that there are many negatives associated with debt settlement and creditors do not have an obligation to accept settlement offers.

Nonprofit Debt Settlement

Nonprofit debt settlement is similar to for-profit debt settlement with one major difference: there is no negotiating.

Nonprofit debt settlement allows consumers to eliminate credit card debt by paying less than what was owed — typically 40%-50% less — over 36 months. This form of debt relief is unique due to the 0% interest rate on your debt over the three-year payment period.

Qualifying for nonprofit debt settlement can be difficult and consumers must make on-time payments without missing any for 36 months.

» Where to find nonprofit debt settlement? – Nonprofit debt settlement is still new and can only be found through a few nonprofit credit agencies. Consumers who want to find these companies should search online using the phrase “nonprofit debt settlement.”

» Who is right for nonprofit debt settlement? – Nonprofit debt settlement is ideal for consumers who are in default status, which means no payment on their credit for 180 days.


Bankruptcy is a court proceeding in which a judge and court trustee examine the assets and liabilities of individuals, partnerships, and businesses whose debts have become so overwhelming that they are unable to pay them.

Bankruptcy is marketed as a “do-over,” but this should only be a choice if no other debt-relief options solve your problem. Bankruptcy has the most negative impact on any debt-relief option, affecting your credit for 7-10 years.

There are two types of personal bankruptcy: Chapter 7 and Chapter 13.

To qualify for Chapter 7, a consumer must pass a “means test” that requires their income to be less than the median income for their state. In Minnesota, which would be income less than $37,320.

However, if you don’t pass the means test, you could file for Chapter 13 bankruptcy.

In Chapter 13, you have a repayment plan approved by the court that allows you to keep your assets in exchange for making regular payments to pay down the debt. This plan typically lasts 3-5 years, with any unsecured debts like credit cards being discharged at the end.

Consumers should note that there are severe consequences to filing for bankruptcy. Credit scores drop 100-200 points. Filing bankruptcy is a negative mark on your credit report for 7-10 years, making it difficult to get a car or home loan.

» Where to file for bankruptcy? – Consumers should consult with an attorney before filing for bankruptcy due to the complex nature of bankruptcy laws.

» Who is right for bankruptcy? – Bankruptcy may be the only option for those who feel that they have exhausted all of their other options and are still unable to pay off their debt in the next five years.

Statute of Limitations in Minnesota

The “statute of limitations” for credit card debt is a law limiting the amount of time lenders and collection agencies have to sue consumers for not paying. If the collection agency does not file within the time frame, the consumer can no longer be sued for that specific debt.

In Minnesota, the statute of limitations is six years and begins on the date of the last payment on an account. This also means that if you make a payment on your debt at any time in the six years, the clock restarts.

Debt Collection Laws in Minnesota

Debt collection agencies like to use high-pressure tactics like threats of garnishments to intimidate the consumer into paying the debt. Although the U.S. has laws to protect consumers from debt collectors, some states have laws to further protect residents.

Residents of Minnesota fall under the Federal Debt Collections Protection Act, which prohibits collection agencies from harassing borrowers or using unfair or misleading tactics to collect debts.

Debt Statistics in Minnesota

  • Consumer Debt: The average resident in Minnesota in 2022 has $100,710 in consumer debt, nearly $4,000 more than the year before.
  • Mortgage Debt: Residents in Minnesota hold an average of $198,039 in mortgage debt. This is the highest in the Midwest but still over $30,000 less than the national average.
  • Student Loan Debt: When it comes to student debt, residents of Minnesota have an average of $33,604, which is about $4,000 under the U.S. average.
  • Credit Card Debt: Minnesotans hold an average of $4,767 in credit card debt, the 11th lowest in the nation.
  • Auto Loan Debt: The average auto loan debt in Minnesota is $4,440, nearly $1,000 less than the national average.
  • Average Credit Score: Minnesota holds the highest average credit score in the U.S. with a FICO score of 724.
  • Identity Theft: There were 9,457 cases of identity theft in Minnesota last year, the 13th lowest in the U.S.
  • Foreclosures and Bankruptcies: In Minnesota, bankruptcies dropped over 2,000 cases with 5,754 cases filed in 2022.

About The Author

Bill Fay

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].


  1. Horymski, C. (2022, April 29) Consumer Debt Review 2021. Retrieved from
  2. Caginalp, R. (2022, October 24) Average Mortgage Debt 2022). Retrieved from
  3. Rounds, H. (2022, November 7) Average Student Loan Debt By State. Retrieved from
  4. Jaracz, J. (2022, July 20) States With the Highest Auto Loan Balance. Retrieved from
  5. Stebbins, S. (2022, July 20) This is How Common Identity Theft is in Minnesota. Retrieved from
  6. Resendiz, J. (2022, February 24) Average Credit Card Debt in America 2021. Retrieved from
  7. Hanson, M. (2022, April 3) Student Loan Debt by State. Retrieved from
  8. Williams, W. (2022, September 29) Average Credit Score by State. Retrieved from
  9. N.A. (ND) Bankruptcy Filing Trends in Minnesota. Retrieved from
  10. Stebbins, S. (2021, September 27) How Mortgage Debt in Minnesota Compares To Other States. Retrieved from