Hawaii News Now: Debt relief requests surging
MMI debt management client, Liana Aulii, and financial educator Thomas Nitzsche appear on Hawaii News Now to discuss rising credit card debt and the connection to Maui wildfire recovery.
Transcript:
Tonight at 10, an emotional financial struggle. Maui Wildfire survivors are opening up about their fight to dig their way out of credit card debts. Our Ben Gutierrez tells us who's stepping in to help.
A national nonprofit is coming to the aid of residents dealing with what seems like an endless stream of expenses. Experts say if action isn't taken quickly debt is only going to grow as
disaster recovery drags on.
“And so we've seen about a 20% increase in the number of folks from Hawaii reaching out for assistance this year over last year and they're coming to us with higher levels of debt.”
Thomas Nitzsche of Money Management International says much of that increase is now coming to light more than a year after the wildfires.
“…and it can be a long process. And in that process you can find yourself experiencing expenses along the way and most people turn to credit cards when they're experiencing those sorts of expenses.”
The nonprofit says its new clients in Hawaii now have unsecured debts like credit cards and personal loans averaging $30,000.
“And so I do know a lot of families now that are still dealing with, like, less income and so they're putting more things on credit, they're putting more things on their cards. And maybe those cards already have a high interest to them.”
Liana Aulii runs an outdoor education program for homeschooled or alternative school students on Moi and has seen the number of students drop since the fires.
“So there is many many, many families that I knew of that maybe then could no longer afford to come to the program because of a direct impact and then probably three times more as an
indirect impact.”
Although her own finances were stretched thin as a new single mom with new expenses and higher interest rates from 2018, Aulii feels fortunate she was able to get a debt reduction plan with a nonprofit's help just before the fires.
“Between the loans, the credit cards, and the car, I paid off like $65,000 in five years as a single mother on Maui. I'm really glad that I did take care of it when I did because, had I waited, it would have just made been exponentially more challenging.”
Although many may feel helpless, experts say there is a way out. Nitzsche says repayment plans have reduced interest rates from about 28% to just 7%.
“Especially a post-disaster situation, you know, creditors have processes in place. It's called a financial hardship plan. And so they will typically work with you to reduce the interest rates and usually the payments in a financial hardship plan.”
Now more statistics and information on debt reduction plans is available at moneymanagement.org. We'll also have that on our website. Ben Gutierrez, Hawaii News Now.
