Consumer Debt in Virginia

    Virginians have high amounts of every type of debt, especially credit card, mortgage and student loan debt. In fact, the state is ranked in the top 10 for the highest levels of all three of these major types of debt, making them prime candidates for relief help from debt consolidation plans.

    Virginians have a median household income of more than $60,000, the eighth highest in the nation. Their salaries make them better able to take on large amounts of debt and pay them off responsibly.

    Although individuals in the state are on the right track, legislators recognize that they could be doing more to protect their citizens. In the coming years, the state government plans to allocate more funds to public colleges and universities in order to curb student debt. The state also has very few consumer protection laws aimed at helping individuals keep their personal finances secure.

    Consumer Debt in Virginia

    Virginians have high amounts of every type of debt, especially credit card, mortgage and student loan debt. In fact, the state is ranked in the top 10 for the highest levels of all three of these major types of debt.

    Despite enormous levels of debt, Virginians are doing well when it comes to paying their bills. They have a median household income of more than $60,000, the eighth highest in the nation. Their salaries make them better able to take on large amounts of debt and pay them off responsibly.

    Credit Card Debt

    Virginia’s credit card debt per capita is the sixth highest in the nation, with each person owing an average of $6,336 as of July 2012, according to the Washington Examiner. This is 12 percent higher than the national average of $5,637. Still, this is an improvement for Virginians, who had $7,298 in credit card debt in 2011 and $8,020 in 2010.

    According to Experian – one of the three main credit bureaus in the country, debt levels are especially high for two Virginia cities, Norfolk and Richmond. Norfolk residents had the sixth highest credit card balances in the country, while Richmond residents took the ninth spot.

    Despite variations in calculation techniques, both reports show that residents of Virginia have significantly more debt than average Americans.

    Mortgage Debt

    Virginians’ mortgages are among the highest in the country, with the average mortgage being $215,470 in January 2012, according to Business Insider. The Washington Examiner posted a similar number five months later, stating that Virginia homeowners owed an average of $209,237. This ranked it sixth in the nation and well above the national average of $167,485.

    But it’s not all bad news for Virginia homeowners. The state’s average mortgage is still a far cry from Hawaii’s, which tops $307,000 and is the highest in the country. And during the period from 2006 to 2010, while many homes nationwide decreased in value, Virginia home values increased by 2 percent.

    Additionally, Virginians are able to pay their mortgages and stay current, more so than the average American. In July 2012, one in every 686 homes went into foreclosure, or 0.15 percent of all homes nationwide. The same month in Virginia, only one in every 1,257 homes entered foreclosure. This was a mere 0.08 percent, roughly half the percentage nationwide.

    Student Loan Debt

    Virginians graduate college with student loan debt that is among the highest in the country. Seniors who graduated with student debt in 2012 owed an average of $30,855, nearly $1,800 higher than the national average of $29,088. This ranked the state sixth overall for the most student debt per graduate.

    The 2012 average was up a third from just two years earlier, when indebted students typically owed $23,327 upon graduation. While the debt jump is partially the result of nationwide tuition increases — the national average education debt increased 15 percent during the same time period — that doesn’t tell the full story.

    The rest of the change can be explained by the rising costs of tuition in Virginia. In-state tuition for public colleges rose an average of more than 10 percent each year over the last few years, significantly more than the average increase of 6 percent nationwide. Students at Virginia’s community colleges fared even worse; in the 2010-11 school year, the state’s community colleges raised tuition an average of 18 percent.

    Such increases made Virginia the 12th-costliest state in which to get a degree. In-state tuition at a four-year institution was an average of $9,618 during the 2011-12 school year, nearly 20 percent higher than the national average of $8,064.

    Fortunately for Virginians, there is an end in sight to major tuition hikes. In July 2012, the Virginia state government announced it would provide an additional $150 million to public higher education during the 2012-13 and 2013-14 school years. This enabled schools to increase their tuitions by smaller amounts. In-state school tuition rose only 4.5 percent for the 2012-13 school year, which is lower than the national average.

    Bankruptcy

    Virginia’s number of annual personal bankruptcy filings doesn’t quite fit the national trend.

    Nationally, the number of individual bankruptcies rose each year in the early 2000s, leading to a sharp peak in 2005 at the start of the economic downturn. That year, there was one personal bankruptcy filing for every 115 adults.

    Then in 2006, bankruptcy numbers dropped, simply because there were fewer people left who were in financial trouble and had not already filed for bankruptcy. After the temporary dip, numbers began climbing again.

    But the bankruptcy trends looked different in Virginia. In-state personal bankruptcies first peaked in 2001 at one bankruptcy per 158 people. It subsided slightly over the next three years before experiencing a second, smaller peak along with the rest of the country in 2005. During that year, there was one bankruptcy for every 179 adults in the state.

    After 2005, Virginia’s personal bankruptcy pattern more closely resembled that of the rest of the country. Bankruptcy numbers dropped significantly, and the number of Virginia bankruptcies in 2006 was less than a third of the 2005 figure. Since then, numbers have risen slowly.

    Consumer Fraud and Identity Theft

    Fast Fact:

    The average FICO credit score in Virginia was 671 in January 2012, a full 10 points higher than the average nationwide. That’s enough to push the state into the top 10. But it’s another 10 points away from the highest average score in the country, held by New Jersey.

    Virginia is highly ranked for consumer fraud, a crime that includes practices such as identity theft, false advertising and scams. For every 100,000 Virginians, there were 355 cases of consumer fraud in 2010, ranking it 10th overall.

    The state ranked significantly lower for identity theft. With 63 thefts per 100,000 people, Virginia ranked 23rd in the country. This disparity signifies that most fraudulent activity was not in the form of identity theft. Instead, data show, Virginians more often fell prey to fraud in forms such as false debt collection, Internet services and sweepstakes.

    These rates vary widely in certain metropolitan areas. The metropolitan area of Arlington, Alexandria and Washington, D.C. experienced 465 fraud cases per 100,000 residents, ranking it 32nd out of 384 U.S. cities. Roanoke also ranked in the top 50, with 438 fraud cases per 100,000 people.

    The state’s cities ranked lower when it came to identity theft. No Virginia city was in the top 50 for identity theft rates in 2010.

    One reason for lower identity thefts in the state is that the state has database breach notification requirements. If any individual or entity maintains personal identifying information and has reason to believe there’s been a security breach, the entity must notify both the Office of the Virginia Attorney General as well as each affected Virginia resident. This enables residents to take action to secure their accounts and to minimize damage done by thieves.

    Virginia State Laws on Consumer Debt

    Virginia state laws do very little to protect consumers in ways that go beyond federal protections. The Virginia attorney general is responsible for enforcing federal laws such as the Fair Debt Collection Practices Act. But few state laws strengthen or add to consumer and debtor rights. However, the state does have its own Consumer Protection Act and a statute of limitations.

    Virginia Consumer Protection Act

    The Virginia Consumer Protection Act states that sellers cannot lie or take part in misleading practices.

    Banned practices under this act include the following:
    • Failing to state that an item is used or defective, where applicable.
    • Falsely stating the quality or type of a service or product.
    • Failing to honor an advertised price.
    • Falsely stating that a service or repair was done.
    • Failing to state a return or exchange policy.
    • Using fraud, false pretenses, deception, false promises or misrepresentation.

    If a seller breaches the Virginia Consumer Protection Act, the buyer can sue for $500 or total damages, whichever is greater. If the unlawful act was purposeful, a buyer can sue for $1,000 or three times the total damages, whichever is greater.

    Statute of Limitations

    Virginia has a statute of limitations of six years for nearly all debts, including written contracts, oral contracts and open-ended accounts such as credit cards. That means that once such a debt is six years overdue, creditors can no longer attempt to collect the owed money. The time period is a year shorter for promissory notes.

    Bill Fay

    Bill Fay is a journalism veteran with a nearly four-decade career in reporting and writing for daily newspapers, magazines and public officials. His focus at Debt.org is on frugal living, veterans' finances, retirement and tax advice. Bill can be reached at bfay@debt.org.

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