A new study by Freedom Debt Relief and Money.com has found that Americans burdened with large amounts of unsecured debt are cutting back on their daily expenses, tapping into their retirement savings, and trying various repayment strategies, but many are still struggling to make significant progress.
This research, titled "Deep in Debt: Borrowers Cuts Expenditures but Still Struggling," can be obtained at FreedomDebtRelief.com, and it is also available for download at PDF.
Freedom Debt Relief is one of the largest and longest-operating debt settlement service providers in the United States. The company, together with Money.com, surveyed 1,800 adults who owed at least $10,000 in unsecured debt, excluding student loans. The study found that 28% of respondents were only able to pay the minimum required payments, and 21% had at least one account that was in arrears.
These findings challenge the assumption that "people become indebted because they are unwilling to change their habits." Borrowers surveyed stated that they are reducing dining out, shopping, and traveling, while adopting various repayment strategies. Nearly a third of them have used their retirement savings to repay debts in the past 12 months, and 24% have used home equity loans to consolidate their debts.
Freedom Debt Relief President Sean Fox states: "People often think that borrowing money and getting stuck in debt for a long time is because they are unwilling to change their habits. This study presents a much more complex picture. Many people are already making difficult choices and actively looking for ways to improve their financial situation. However, they are still struggling because they don't know where to start, nor do they know which strategy is most suitable for their particular circumstances."
Borrowers are making sacrifices, but they still need a path forward.
The study found that borrowers have a strong desire to reduce their debt. Their goals are not only to repay the remaining balance or lower interest, but also to regain a sense of control, relieve stress, and establish greater financial stability.
Main findings include:
- Many borrowers are still struggling to keep up with their payments: 28% can only afford to make the minimum repayments, and 21% have at least one overdue account.
- Debt reduction is both a financial priority and an emotional priority: 48% of people hope to regain a sense of control and feel financial stability, while 48% wish to alleviate stress and anxiety related to money.
- Cutting expenses has become a daily routine: 41% of people have stopped dining out or ordering takeout, and 40% have stopped unnecessary online shopping.
- Borrowers hope to gain some respite immediately: 60% prioritize reducing stress, 57% prioritize lowering monthly payments, and 56% prioritize improving cash flow.
- Speed may be more important than protecting credit: 79% are willing to accept a decrease in their credit score to achieve a debt-free status more quickly, among which 37% are willing to accept a reduction of 100 points or more.
- Extra cash will be used to enhance financial security: Approximately 41% will be prioritized for faster debt repayment, while only 5% will be reserved for discretionary spending.
Borrowers also consider negotiation to be a viable option, but it may be difficult to actually implement. Although 69% believe that negotiating directly with the credit card issuer is safe, 14% have attempted to contact creditors but did not complete the process. Only about half of them feel somewhat or very confident about communicating with creditors.
This gap highlights that professional debt settlement services may provide structured processes and expert support for qualified consumers who feel unable to negotiate with creditors on their own. Overall, 52% consider debt settlement to be a safe option, and borrowers who are in arrears are more likely to see it as such as well.
Freedom Debt Relief Launches Consumer Research Program
This report is the first study by Freedom Debt Relief Insights. This new research initiative will combine original surveys, proprietary data, as well as the company's over 20 years of experience in helping consumers navigate financial difficulties. The program will publish research and commentary on the experiences, behaviors, and financial challenges of consumers burdened with large amounts of unsecured debt.
Freedom Debt Relief Insights aims to provide consumers with clear and practical information, while also helping financial services professionals, consumer rights advocates, researchers, policymakers, and other stakeholders to gain a deeper understanding of financial difficulties.
The complete research can be viewed online or downloaded at PDF.
About Money.com
Money has a history of over 50 years and is committed to helping people achieve their financial goals through the latest information, education, and tools. As a digital platform, Money aims to make everyone's life more prosperous. Its representative lists include Best Places, to, Live, Best Crypto Exchanges, Best Mortgage Lenders, Best Life Insurance, Best Auto Insurance, Best VA Loans, Best Homeowner Insurance, Best High - Yield Savings Accounts, Best Credit Cards, Best Colleges, Best Student Loans, and Best Student Loan Refinance Companies. The goal is to improve your financial situation and promote well-being. For more information, please visit Money.com.
About Freedom Debt Relief
Freedom Debt Relief is one of the largest and longest-operating debt settlement service providers in the United States. The company helps consumers reduce their debt burden through a proven program, enabling them to take better control of their finances and assisting them in making better financial decisions in the future. Freedom Debt Relief represents consumer clients in negotiating with creditors to reduce the amount of debt they owe. Freedom Debt Relief is a certified debt settlement company located in San Mateo, California, and has served over 2 million consumers since 2002, helping to resolve debts totaling more than $22 billion.
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