Debt Relief Options in Virginia

Where do you go for help when you're in debt and live in Virginia? In this article, you will read about your debt relief options and learn some of the rules and regulations that apply in Virginia.

Choose Your Debt Amount

Debt Statistics in Virginia







Debt Relief Programs in Virginia

If you need debt relief in Virginia, credit counseling agencies (nonprofit and for-profit), banks, credit unions and online lenders specialize in helping consumers pay off credit card debt, but each source offers very different approaches to solve your problem.

The five debt-relief programs offered in Virginia include debt management programs, debt consolidation loans, debt settlement, nonprofit debt settlement and bankruptcy. Each program has pluses and minuses to consider before you sign up.

Here is an outline for how debt relief works with each program:

Debt Management

Debt management programs in Virginia work with lenders to reduce the interest rate on credit card debt to somewhere around 8% and arrive at an affordable monthly payment that eliminates debt in 3-5 years.

As of March 2022, the average interest rate on credit cards is 16.7%, but if you miss a payment, the rate can jump to 20%-25%. Miss two payments and the rate can go to 25%-30%.

So, if you owe $5,000 on credit cards and reduce the rate from 25% to 8%, the interest payment drops from $105 to $33 a month. That’s $72 a month you can use to pay off your debt faster. Counselors at nonprofit credit counseling agencies factor your income and expenses and calculate an affordable monthly payment to eliminate your credit card debt.

Another plus Virginians might find appealing: Your credit score is not a factor for enrolling. You can be debt-free in 3-5 years if you make on-time monthly payments, and you may even pay the debt off early. If you don’t like the program, you can quit, though that means the credit card company will void the interest rate concession and you’re back to paying 20%-30%.

» Where to find it? – Debt management plans in Virginia are offered by nonprofit credit counseling agencies, who work with creditors to reduce interest rates and monthly payments to a manageable level. The program covers unsecured debts, like credit cards, but not secured debts, like houses or cars.

» Is this right for you? – Anyone in Virginia with high-interest credit card debt would be helped by this program. It reduces interest rates and chips away at the amount owed until, in 3-5 years, you are free from the debt.

Debt Consolidation Loans

A debt consolidation loan is one big loan Virginians use to pay off debt on multiple credit cards. You make one monthly loan payment to the bank/credit union instead of 3-4 credit card payments. The interest rate depends on your credit score and whether you are willing to put up collateral, like your home or car, to back the loan.

Typically, people put up collateral and pay around 10%-12% for a debt consolidation loan, compared to the 25% they likely are paying to credit card companies. This is a single payment to a single entity, at a lower interest rate that saves money and simplifies payments.

It’s a big savings, which makes this look like a really good deal. And it can be.

However, the loan you take means you still owe the same amount, just to a different lender. If you don’t stop using your credit cards, you must pay the debt consolidation loan and whatever you’re buying on credit cards.

And that’s if you qualify in the first place. A poor credit score could eliminate you.

» Where to find it? – Most banks, credit unions and online lenders offer debt consolidation loans. It’s worth your time to shop around for the lowest interest rate and repayment terms.

» Is this right for you? – It’s a wise option for anyone with a good credit score (670 or higher) and the discipline to stop using credit cards. Generally, consolidation loans in Virginia offer a lower interest rate than the onerous and burdensome rates charged by credit card companies.

Debt Settlement

Debt settlement allows consumers to settle the debt for less than what is owed. The payment usually is made in a lump-sum and comes after 2-3 years of saving and negotiating with one or more creditors to get them to agree to this.

As good as this sounds for Virginians, it can be a long process, and it damages your credit report for seven years. Also, the IRS considers forgiven debt of more than $600 as income that must be declared on your tax return.

It works like this: You, or a company you hire, must negotiate a payment amount agreeable to you and your creditors. You stop sending even minimum payments to the card companies, which means late fee penalties and interest are added to what’s already owed. Instead, you pay into an escrow account. When that account gets big enough, the company doing the negotiating, attempts to reach an agreement with the creditors. Be aware: Card companies do not like this form of debt relief and some refuse to deal with debt settlement companies.

While debt settlement companies like to brag that they can cut your credit card debt in half, that doesn’t account for their fees and late payment penalties and interest on your credit card accounts.

The benefit to the credit card company is that it receives some money, as opposed to little or nothing if you default.

» Where to find it? – For-profit debt settlement companies specialize in this service. They negotiate on your behalf with the credit card companies, who must agree to the plan before it goes forward. The process usually takes 2-3 years and card companies are under no obligation to accept settlement offers.

» Is this right for you? – Anyone in Virginia with large amounts of debt who is desperate for a solution so they don’t have to declare bankruptcy should consider debt settlement. If you have $50,000 in credit card debt – two million American consumers do – getting it knocked down to $25,000 sounds pretty good.

Nonprofit Debt Settlement

Nonprofit debt settlement was created in 2021 by nonprofit credit counseling agencies and the lure is the same as traditional debt settlement – Virginia consumers will pay only 50%-60% of what they owe to settle the debt. How that happens is completely different from what for-profit debt settlement companies do.

For openers, there is no negotiating done. Lenders agree to the terms upfront. Rules that must be followed include:

  • The consumer hasn’t made a payment in 180 days
  • Consumer agrees to 36 fixed monthly payments
  • Failure to make one payment means canceling the agreement
  • You can pay off the debt early, but the payoff period can’t be extended beyond 36 months

The benefit to the consumer is that there is 0% interest charged during the 36-month repayment time.

» Where to find it? – The program is fairly new, so only a few nonprofit credit counseling agencies offer the program and only a few credit card companies and banks participate. Nonprofit credit counseling agencies are certified and accredited by the National Foundation for Credit Counseling. Federal law requires the agency act in the client’s best interest. Search online for “nonprofit debt settlement” to find an agency that will provide this program.

» Is this right for you? – This is for Virginians who face overwhelming credit card bills but lack the income to pay them off. You won’t have to pay any interest on the debt, as long as you keep up with the 36 monthly payments it takes to get through the program.


Bankruptcy is painful, but for some Virginians, it might be the best solution available. It gives you a second chance to get your finances in order and can be done without losing many of your possessions, including your home.

There are two major types of bankruptcy, Chapter 7 and Chapter 13. In Chapter 7 bankruptcy, non-exempt assets are sold by a trustee appointed by the court and the money is used to pay off debts. Key assets are exempt from this process, notably your home, car, personal items needed for work, pensions and Social Security.

In Chapter 13 bankruptcy, you keep your assets in exchange for making regular payments to the trustee to pay down debt.

The consequences for bankruptcy are significant. Your credit score may drop 100-200 points. Bankruptcy stays on your credit report for 7-10 years, making it more difficult to get credit for a home or car loan in the future.

» Where to find it? – Bankruptcy attorneys in Virginia are a must to get through this process successfully. The attorney knows the ins and outs of the system and can protect you, your family, and your assets as much as possible in the process.

» Is this right for you? – Look at your income and expenses. If you can’t figure out how to pay off all your debts in five years, bankruptcy might be the best debt-relief option available.  It’s always best to try nonprofit counseling, debt management, debt settlement or debt consolidation before bankruptcy, but if those are not for you, bankruptcy is the final resort.

Statute of Limitations in Virginia

The statute of limitations of debt, which means that’s how much time a debt collector has to file a lawsuit to recover the debt through the court system, varies based on the type of debt in Virginia. It is as follows:

  • Oral debts (no written contract), 3 years
  • Auto loans, 4 years
  • Credit cards, 5 years
  • Mortgages, 5 years
  • Medical debt, 5 years
  • State taxes, 7 years

Debt collectors can still try to recover old debts, but they can’t use the courts to do so.

Debt Collection Laws in Virginia

In addition to the federal Fair Debt Collection Practices Act, Virginia law makes it illegal for debt collectors to communicate with you in a way that simulates a judicial. Because this is a criminal statute, debtors may report a violation but can’t sue the collector for breaking the law.

Debt Statistics in Virginia

With fairly low unemployment and high income, the average Virginian appears well-situated to handle above-average mortgage debt.

  • Mortgage debt: Virginia ranked eighth highest nationally with an average mortgage debt of $245,054 in 2021.
  • Auto loan debt: Virginia’s average consumer auto loan balance was $20,013 in 2021, which ranked 25th nationally.
  • Bankruptcies:  Virginia has the 16th highest rate of bankruptcies per 1,000 residents (1.55) in 2020.
  • Median income: Virginia is 11st in median household income ($82,328).
  • Unemployment rate: Virginia had the nation’s 17th lowest unemployment rate (3.3%) in December 2021.

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. Resendiz, J. (2022, February 24) Average Credit Card Debt in America: 2021. Retrieved from
  2. N.A. (ND) What Is the Average Credit Score by State? Retrieved from
  3. Hanson, M. (2021, August 12) Student Loan Debt by State. Retrieved from
  4. Simons, G. (2021, May 7) Statute of Limitations on Debt in Virginia. Retrieved from
  5. Loftsgordon, A. (NA) Virginia Fair Debt Collection Laws. Retrieved from
  6. Karl, S. (2022, January 24) Bankruptcy Rates by State. Retrieved from
  7. Stolba, S. (2021, April 12) U.S. Auto Debt Grows to Record High Despite Pandemic. Retrieved from
  8. N.A. (ND) Real Median Household Income by State, Annual. Retrieved from
  9. Stolba, S. (2012, February 15) Mortgage Debt Sees Record Growth Despite Pandemic. Retrieved from
  10. N.A. (ND) State-Level Debt-to-Income Ratio, 1999-2021. Retrieved from
  11. N.A. (ND) Unemployment Rates for States. Retrieved from