Washington, DC Debt Relief Guide

In 2021 our nation’s capital was affected by COVID-19, politics, and a lockdown of the economy due to the pandemic. Despite this, employment in the District of Columbia has since increased. The Federal Government, one of the leading employers in Washington, DC, added 1.7% new jobs since June 2020, partially as a response to COVID. Retail sales, including supermarkets and restaurants, have done well and have exceeded pre-pandemic levels. Major employment sectors in DC. also include non-profits as well as technology companies.

“Washington, DC is doing relatively well right now compared to other areas of the nation. It has a strong economy for most people, but affordability for rentals and owner-occupied homes in the District is proving to be challenging for potential homebuyers.” says Gary Herman, President of Consolidated Credit. He continued…“DC residents need to focus on financial fundamentals like maintaining a budget, keeping debt minimized, and maintaining good credit to get ahead in today’s economy.”

Consolidated Credit Helps Washington, DC Residents Reduce Their Total Credit Card Payments by Up to 50%

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Consumer Debt in Washington, DC

This chart shows a breakdown of average consumer debt in Washington, DC, based on the latest report of Household Debt report from the Federal Reserve.

In 2020, 870 residents filed for bankruptcy.

Income and employment in Washington, DC

Washington, DC is not a right-to-work “state,” in fact, DC is not a state at all, just a district.  When a state (or district in this case) is not “right to work,” union dues are mandatory for employment. That’s even the case if the worker is not a part of the union.

The job market is competitive, but there are labor shortages, especially for highly skilled tech talent and workers with current security clearances as well as hospitality, education, and other professionals. The metropolitan Washington, DC area had significant job growth in July of 2021. With a 22.9% percent growth rate compared to 18.5% for the rest of the nation, the metro DC area is leading the way. Those who can get or have security clearances are in very high demand.

About one-third of the national non-profits have either a headquarters or an office of some kind in the Metro DC area. Unlike the government and the technology sectors, non-profits have been hit hard during the economic downturn. They are receiving less revenue, but at the same time, are seeing demand rise. If conditions continue, many of them will close, which will impact the area negatively.

Pay rates in the District of Columbia can be excellent, with an average per capita income of $56,147 and an average median household income of $86,420; even the minimum wage is high at $15.20. But it still has one of the nation’s highest poverty rates at 13.5%.

When you’re unemployed in Washington, DC, you receive unemployment benefits from the District of Columbia. Typically Unemployment Insurance (U.I.) will last 26 weeks. The Pandemic Unemployment Assistance program (PUA) and other federal unemployment programs ended as of Sept 4, 2021. If you are only working part-time, you may still be eligible to apply for U.I. benefits.

Washington, DC is an expensive city to live in. It can be challenging to keep up with basic living expenses despite high wages, especially rent or a mortgage. When that happens, sometimes people use credit cards to pay their bills. If you’re in this situation, take steps to maintain a budget and keep high-interest rate credit card debt minimized.

Apply for unemployment benefits in Washington, DC»
To file a claim by telephone number: 202-724-7000

Banking and taxes in Washington, DC

Residents of our nation’s capital have a state income tax that ranges from 4%-8.95% and a district sales tax of 6%.

Taxes can be reduced by taking advantage of the Individual Income Property Tax Credit available to both homeowners and renters. First-time homebuyer tax credits, as well as homestead deductions, are also available.

Washington, DC  does not have any tax-free holidays or periods. However, neighboring Virginia and Maryland do have a few tax holidays, and residents can take advantage of the excellent Metro system to access shopping malls and other retail locations.

District residents are slightly less likekly to bank than the average American. The percentage of unbanked residents—those without a checking or savings account is 8%.

Washington, DC housing market

Housing in the District of Columbia has been competitive as the city and metro area have grown. With relatively high salaries, residents of the District have been able to bid up prices for new homes and condos. However, this is pricing many new buyers out of the market. This is somewhat offset by the availability of more affordable housing in Maryland and Virginia, some of which have easy access from the Metro system.

Washington, DC residents can also take advantage of homestead deductions, including tax relief for senior citizens and disabled property owners.

  • 41.6% of Washington, DC residents are homeowners.
  • Median mortgage payment: $1,784.
  • Median rent payment: $1,541.

Washington, DC  does have an emergency rental assistance program if you are facing difficulties making rental payments. Additionally, Washington, DC has assistance for those having problems with their mortgage. For those who wish to purchase a home, there are many available programs sponsored by the District.

Retirement in Washington, DC

Washington, DC has a new summer tourism commercial with the hashtag “#WeGotThis.” And for retirees, they do “got this.” The District and the surrounding metro area feature many options that are attractive to retirees. Amenities include cultural events, fine dining, history, shopping, access to education, a large diversity of housing, excellent public transportation, and easy access to other metropolitan areas on the east coast of the United States. The Washington, DC metro area features three airports, including one on the Metro train line and high-speed trains that make travel to New York, Philadelphia, and Boston quick and accessible. You could easily live in Washington, DC or some of the surrounding areas and not need a car.

However, Washington, DC has a high cost of living, and for those who are retired and on a fixed income, retirement in The District of Columbia could be a challenge. You’ll need an average of $1,000,000 to retire comfortably, but the average retirement savings is only $325,671. Other areas offer a much lower tax structure, less expensive housing, and a better climate. The average resident retires at age 67, leaving a lot of time to enjoy the city. About 21% of retirees rely upon Social Security for at least 90% of their income. Many retires live just outside of the Washington, DC borders where, in some instances, living costs are lower.

Average Washington, DC insurance premiums

District of Columbia residents have higher rates when they need to protect their homes and vehicles but lower cost health insurance. Washington, DC is a no-fault district for auto insurance. The average driver has an auto insurance premium of $1,881 per year.

Homeowners’ insurance rates are reasonable and lower than average; insurance premiums are $1,035 per year. That could be due to a large number of condos and co-ops located in Washington, DC.

Health insurance premiums are lower compared to national averages. Washington, DC has the fourth-lowest uninsured rate in the nation, with only 3.9% of residents lacking coverage. The annual health insurance premium in Washington, DC is $4,968.

Helpful resources for DC residents facing hardship

Food Insecurity

Food Bank Phone Number Address
Capital Area Food Bank 202-644-9800 4900 Puerto Rico Ave NE, Washington, DC 20017
Crowder Owens Food Bank 202-635-9053 600 W Street, NE, Washington, DC 20002
OLPH LOC Food Pantry 202-575-1663 1600 Morris Rd SE, Washington, DC 20020
DC Hunger Solutions 202-986-2200 1200 18th Street NW, Suite 400, Washington, DC 20036
Center For Community Change 202-339-9300 1536 U St NW, Washington, DC 20009
Washington City Church Of The Brethren 202-547-5924 337 North Carolina Ave SE, Washington, DC 20003
Community Partnership 202-312-5510 920 Rhode Island Ave NE, Washington, DC 20018
Share Our Strength 202-393-2925 1030 15th St NW, Washington, DC 20005
Damien Minsitries 202-526-3020 2200 Rhode Island Ave NE, Washington, DC 20018
Central Union Mission 202-745-7118 65 Massachusetts Ave NW, Washington, DC 20001
Bread for the City 202-265-2400 1700 Good Hope Rd SE, Washington, DC 20020
Sixth Church Food Closet 202-723-5377 5413 16th St NW Washington, DC 20011
Emergency Food And Shelter Program 202-646-3487 1050 First Street, NE Washington DC, 20002
Food To You Mobile Food Pantry (no website) 800-795-3272 1400 Independence Ave SW, Washington, DC 2025
The Alliance To End Hunger 202-688-1157 425 3rd St SW #1200, Washington, DC 20024

Veterans

As of 2019, Washington, DC  was home to 26,156 Veterans. These resources are available to help Veterans that are facing unemployment, homelessness, and other hardships.

Office of Veterans Affairs | DC
441 4th Street, NW, Suite 707 North, Washington DC 20001
202-724-5454

U.S. Department of Veterans Affairs District of Columbia
810 Vermont Ave NW, Washington, DC 20420
800-827-1000

Washington DC VA Medical Center
50 Irving Street, NW, Washington, DC 20422
202-745-8000

Veterans First – Friendship Place
4713 Wisconsin Ave NW Washington DC 20016
202.364.1419

Helpful employment resources for Veterans:

How Consolidated Credit helps Washington, DC residents find debt relief

In 2020, Consolidated Credit provided free credit counseling services to 649 credit users Washington, DC. Of those, 32 went on to consolidate their debt with our help through a debt management program. The others received a free debt analysis and complementary budget evaluation, and they were directed to the right solution for their situation to get out of debt as quickly as possible.

Relief options to consider if you’re in debt in The District of Columbia

A debt consolidation loan is an unsecured personal loan that you get to pay off credit cards and other existing debts. You need good credit to qualify for the lowest interest rate possible. That low rate helps lower your total payments so you can get out of debt faster, even though you may pay less each month. So, this is a good solution for Washington, DC residents with a high credit score.

A home equity loan or home equity loan of credit (HELOC) is a debt solution that’s only available to homeowners in Washington, DC . If you have equity available in your home, you can borrow against that equity and use the funds to pay off your debt. However, this can be a risky option for paying off credit card debt if you are living paycheck-to-paycheck. Home equity lending products put Washington, DC residents at risk of foreclosure if they can’t make the payments. If you are considering borrowing against your home, call 1-800-435-2261 to speak with a HUD-certified housing counselor to make sure this is a safe option for you.

Nonprofit credit counseling services like those provided by Consolidated Credit help Washington, DC residents identify the best solution for getting out of debt. This is a free service. Washington, DC residents can get a confidential debt and budget evaluation from a certified credit counselor. Then the counselor will explain options that are available to each person and recommend the best course of action based on an individual’s needs and goals.

If a Washington, DC resident cannot get out of debt effectively on their own but has the ability to repay everything they owe to avoid bankruptcy, a debt management program is often the best solution. You enroll in the program through a credit counseling organization. They help you find a monthly payment you can afford and then work with your creditors to reduce or eliminate interest. Qualifying Washington, DC residents can get out of debt in 36-60 payments.

Debt settlement allows Washington, DC residents to get out of debt for a percentage of what they owe. You can settle debt on your own and negotiate with individual creditors and collectors or enroll in a debt settlement program to get professional help. This does cause credit damage. Each debt settled will be noted on your credit report for seven years from the date the account first became delinquent. However, it can be a viable debt relief option for avoiding bankruptcy when you are completely overwhelmed with debt.

If you’re curious how we can help you, below, you will find a few case studies from clients that we’ve helped in Washington, DC. If you’re facing challenges with debt, call us at 1-888-294-3130 to receive a free debt and budget evaluation from a certified credit counselor.

Althea H. from Washington DC

My interest rates were too high – 16, 17, 18 percent. Consolidated Credit was able to lower my rates to a point where my payments now go toward the principal so I can finally get out of debt. My credit score is going up, too! It was around 650 before but now it’s close to 700.

Where she started:

  • Total unsecured debt: $18,601.00
  • Estimated interest charges: $10,654.62
  • Time to payoff: 13 years, 8 months
  • Total monthly payments: $744.04

After DMP enrollment:

  • Average negotiated interest rate: 8.50%
  • Total interest charges: $3,680.08
  • Time to payoff: 4 years, 9 months
  • Total monthly payment: $390.00
Time Saved:
8 years, 11 months
Monthly Savings:
$354.04
Interest Saved:
$6,974.54
Maria from Lorton, VA

If not for your persistence, I probably still wouldn’t be sleeping at night. It was hard at first, but when 2 or 3 of my credit cards were paid off it was an awesome feeling. Quick response and always there to assist. Thanks!

Where she started:

  • Total unsecured debt: $39,179.00
  • Estimated interest charges: $22,369.05
  • Time to payoff: 14 years, 3 months
  • Total monthly payments: $1,567.16

After DMP enrollment:

  • Average negotiated interest rate: 5.11%
  • Total interest charges: $1,920.78
  • Time to payoff: 4 years, 4 months
  • Total monthly payment: $798.00
Time Saved:
9 years, 11 months
Monthly Savings:
$769.16
Interest Saved:
$20,448.27
Aaron from Rockville, MD

This is a great service!

Where he started:

  • Total unsecured debt: $44,198.00
  • Estimated interest charges: $25,759.74
  • Time to payoff: 14 years
  • Total monthly payments: $1,767.92

After DMP enrollment:

  • Average negotiated interest rate: 8.30%
  • Total interest charges: $8,385.72
  • Time to payoff: 4 years, 4 months
  • Total monthly payment: $1,016.00
Time Saved:
9 years, 8 months
Monthly Savings:
$751.92
Interest Saved:
$17,374.02