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How To Consolidate Your Debts in Wyoming

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In a Nutshell

Continue reading to learn more about debt consolidation plans and debt relief.

Written by Attorney Alexander Hernandez
Updated January 5, 2022

The coal mining and farming industry in Wyoming is facing tough times. As a result, paying monthly bills has become a struggle for many Wyoming workers. If you're in Wyoming and are facing these financially difficult times, know that debt relief is possible. Continue reading to learn your options. 

Debt consolidation is the process of combining your debt payments into a new loan. Benefits include a lower interest rate and the convenience of a single monthly payment. Several options exist such as personal loans, home equity loans, credit card balance transfers, and debt management plans. If choosing a credit card balance transfer, make sure you check how much the transfer fee is and confirm the interest rate that will go into effect when the promotional period expires. Make sure the interest rate is not higher as this will increase your monthly payment. The same applies to personal loans. With a home equity loan, ask your lender if there is a loan origination fee or appraisal costs.

Debt consolidation works best when overspending isn’t an issue. Overspending could result in increasing your debt if you tap into your credit cards again. If you took out a home equity loan or a line of credit to consolidate your debts, a default could result in losing your home because of a foreclosure.

A debt consolidation differs from a debt settlement because with a consolidation, you are refinancing your debt. With a debt settlement, you reach an agreement with a creditor to pay less than your original loan amount. This will negatively impact your credit score while a debt consolidation may not. A debt management plan is another form of debt consolidation. A non-profit credit counseling agency will negotiate with creditors to combine your monthly payments into a single payment and reduce high-interest rates. Free budget counseling is also offered. If you have been denied a Wyoming debt consolidation loan or a credit card balance transfer, a debt management plan may be the right choice to help with your finances.

Learn More Through Free Nonprofit Credit Counseling

Anyone can benefit from credit counseling since it means working with a credit counselor experienced in dealing with financial situations similar to yours. Credit counseling will teach you about finances, budgeting, and tracking spending habits. While credit counseling agencies offer debt management plans, they do not offer loans since they aren’t a bank. When working with a credit counseling agency, make sure they are accredited by the NFCC.

How To Consolidate Your Debts in Wyoming

Continue reading to learn more about debt consolidation plans and debt relief.

Collect the Details About Your Debts

Start collecting information on your debts which includes your credit card balances, interest rates, and the amount of your monthly payments. Knowing the balance on your credit cards will help determine your monthly payments. You should also obtain your credit report to make sure all creditors are included. Review your credit history as well for any mistakes. By law, you are entitled to a free credit report every 12 months.

Next, categorize your debts into secured versus unsecured debt. Examples of secured debt include your mortgage and auto loan(s). Unsecured debt includes your credit cards, personal loans, medical bills, and student loans.

Determine Your Monthly Income

Besides the balance on your credit cards, your income is needed to figure out how much you can afford to pay back. Irregular income such as commission-based jobs will make it more difficult to calculate how much you can afford. As a result, you may default on your loan payments which will hurt your credit score.

When reviewing your most recent paystubs, make sure it is a typical pay stub. For example, if you received more overtime than normal or cashed out your PTO (paid-time-off), then when you calculate your monthly income, it will be higher than normal. This will result in a payment plan you can’t afford. If you are paid bi-weekly, multiply your bi-weekly income times 26 and divide the answer by 12. If you multiply your bi-weekly times two, you are skipping two pay periods. If you receive other forms of income such as Social Security, it’s important to know that income is exempt in a bankruptcy case. Therefore, it may be to your advantage to file for bankruptcy. Child support and alimony should not be included in your calculations since it isn’t always paid timely, sometimes not at all. You want to make sure you’re not setting yourself up for failure by inflating your monthly income. Make adjustments in your expenses and income if you are including your spouse or domestic partner. 

Put Together Your Budget

How much you can afford to pay your creditors depends on your budget. Certain expenses are fixed, such as rent/mortgage, auto loans, and car insurance, while other expenses fluctuate monthly. Review at least the last 2-3 months of your bank statements to see how much you spend on average. Include expenses that occur every few months, such as car maintenance. Don’t forget annual bills like property taxes and insurance. If you don’t budget for it, when that bill comes due, you will not have enough money to pay for it. Calculate the monthly average of yearly expenses by dividing the full amount by 12. Subtract your expenses from your income. That is how much money you have available to pay creditors. Is there a lot of money left over? Look for expenses that weren’t included. If you are facing the opposite situation and have no disposable income or even a negative balance, debt consolidation is not a good option because you can’t afford the monthly payments. To help with your budget and tracking expenses, take advantage of apps and programs offered by your bank or other tools such as  Mint, Albert, and spreadsheets.

Do the Math 

Divide your total amount of credit card debt by 60 (months) to calculate paying off your credit card balance without interest in five years. If need be, divide your credit card debt by 120 (months) or 10 years. This will give you an idea of how much your monthly payment after a consolidation would have to be in a best case scenario. Compare your monthly debt total to your disposable income. If you have enough money left over, then a debt consolidation is a good choice. When considering a Wyoming debt consolidation loan, it also makes sense to figure out your credit utilization ratio as this may be helpful when negotiating with creditors. Credit utilization ratios are used to calculate your credit score. For example, the closer your debt amount is to your credit limit, the more it hurts your credit score. To figure out your credit utilization ratio, get the total amount of your debt and divide it by your credit limit. A good number is below 30 percent. 

Review Your Wyoming Debt Consolidation Options

If you have good credit, consider a credit card balance transfer or an unsecured debt consolidation loan. Remember to find out the interest rate on a credit card balance transfer when the promotional period ends. Don’t risk defaulting on your monthly payments by assuming you will get another offer before the promotional period expires. 

If you are going to refinance your mortgage or get a home equity loan, besides the added cost of an origination fee, your lender may offer an Adjustable Rate Mortgage. Known as ARM, this means the interest rate changes monthly. This could result in higher monthly payments. If you can’t afford the payments, you risk defaulting on your loan and losing your house in a foreclosure. You are also reducing the amount of equity in your home. Equity is the value of your house minus what you owe on the mortgage. If you can’t get a consolidation loan because of bad credit or you don’t have enough equity in your home, then consider a debt management plan.

Why Using Your Retirement Account to Consolidate and Pay off Your Debts is a Terrible Idea

Even though you have enough money in your retirement account to pay off your credit card debt, withdrawing money before retirement age results in tax consequences. You will also have less money available come retirement. Retirement accounts are also protected from creditors, even in a bankruptcy case. However, once retirement funds are transferred to personal accounts such as a checking account, that protection is lost.

Other debts to exclude from consolidation is your mortgage since mortgages have a lower interest rate than credit cards. Also, Wyoming bankruptcy exemptions only protect a certain amount of equity in your property. In other words, paying off your mortgage may not be in your best interests if you file for bankruptcy. Instead, if you need to lower your mortgage payments, ask your lender about mortgage modification programs. 

Just like your home, think twice before paying off your car loan. Bankruptcy exemptions protect $5,000 of equity in your car. Anything above that amount, the bankruptcy trustee could have you pay back and use those funds to pay your creditors. Since student loans can be negotiated separately, exclude them from a debt consolidation. Consider an income-based repayment plan that could reduce your monthly student loan payment instead. 

Exclude personal loans owed to friends and family since you are probably paying them back with little to no interest. By paying them off with a debt consolidation loan, you will likely be paying a higher interest rate which will cost you more in the long run.

Apply for a Wyoming Debt Consolidation Loan

Did you receive an advertisement from a lender with a check enclosed? Don’t cash that check until you have read the fine print and researched the lender via trustworthy websites such as the BBB (Better Business Bureau) and the Wyoming State Attorney General. Be careful of offers from unknown lenders via email, mail, phone calls or through other aggressive sales tactics.  Look out for lenders wanting money up front and that offer high-interest rates. Try your own bank for an unsecured loan first. If a debt consolidation loan with favorable terms is not available to you due to your credit score, consider a debt management plan.

How to Stay Current with Payments After Consolidating Your Debts in Wyoming 

As you take steps towards being debt-free, don’t spend money unnecessarily. Pick a due date that is not during the same pay period as your larger expenses such as your mortgage or rent. Otherwise, you risk having little to no money until your next paycheck. Avoid late payments and late fees by having the payments withdrawn automatically from your bank account. Set goals such as paying off your debt faster by making more than the minimum payment which also improves your credit score. Other goals could include contributing more money to your retirement or savings account. Be proud and reward yourself for accomplishing your goals.

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Wyoming Debt Management Plan

If you were denied a typical loan consolidation or credit card balance transfer, then consider a Wyoming debt management plan which is another form of debt consolidation.

With a debt management plan, also known as a DMP, you will work with a certified credit counselor to prepare a budget with a 48 to 60-month payment plan. With a debt management plan, you can consolidate your payments into a single payment and reduce the interest rates on your credit cards. The initial session with a credit counseling agency is free. However, there may be a set-up fee as well as additional fees depending on the services you agree to.

Wyoming Debt Settlement

A debt settlement is different from consolidating your debts because you aren’t paying back the total amount of debt. Debt settlement is common when a debt collection agency has the debt or a lawsuit has been filed against you. If it is an old debt that is already affecting your credit score and you can reach a favorable settlement, this may be a good option. However, with a Wyoming debt settlement, there could be tax consequences. For example, if you owe $1,000 and settle for $400, the difference of $600 is considered taxable income. In dealing with the debt settlement company, research with the links provided above. Also, require the debt settlement company to provide proof in writing that they own the debt before you agree to pay them.

Wyoming Bankruptcy

After going through each of the steps above, if a debt consolidation or debt management plan doesn’t work for you, consider filing for bankruptcy. Upsolve is here to help you for free. We offer hundreds of articles on bankruptcy for every state, including Wyoming. At Upsolve, we have helped thousands of people like you. If you wish to consult with an attorney before filing for a Wyoming bankruptcy, we can provide you with referrals free of charge. 

Written By:

Attorney Alexander Hernandez


Since graduating from Nova Southeastern School of Law in 1999, Alexander Hernandez has focused a majority of his law practice on bankruptcy law. He was a founding partner of the South Florida Bankruptcy Center which focused exclusively on Chapter 7 and Chapter 13 bankruptcies. Al... read more about Attorney Alexander Hernandez

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