2023 Guide to Debt Consolidation and Relief in Maine

Maine boasts one of the highest minimum wage rates in the U.S., currently $13.80 per hour but rising to $14.15 on January 1. However, the state also has seen it’s share of labor issues as the lobstering, paper-making and logging industries have seen large declines.

This means the average Maine family has a higher-than-average amount of consumer debt at $77,530.

If you’re a Maine resident struggling to make your monthly payments, here’s what you need to know to get some relief.

How to Become Debt-Free in Maine

There are four primary ways to escape the debt trap.

1. Debt Consolidation Loan

Works best for: People with 670+ credit scores

Debt consolidation loans involve using a new, larger loan to pay off your other unsecured debts, including credit cards. A debt consolidation loan should typically have a lower interest rate than your current debts to be effective.

This leaves you with one monthly payment and one creditor, saving money and simplifying your payments.

2. Debt Consolidation Company / Debt Consolidation Program

Works best for: Anyone with more than $10,000 in unsecured debt who is struggling to make their payments and wants to avoid bankruptcy.

Debt settlement involves negotiating with creditors to repay less than the total amount they owe, sometimes as a lump sum and sometimes as a longer-term payment plan.

In Maine, debt settlement can help you pay off different forms of consumer debts, including:

Credit cards/lines of credit
Personal loans
Department store cards
Old judgments
Student loans in default
Other unsecured loans or debts

To make debt settlement work, you must stop paying your debts for three to six months until your creditor charges off the debt. This will damage your credit score but will incentivize the creditors to negotiate. Once settlements are reached, and payments are made, your credit score will rebound.

Pro tip: The average debt settlement customer ends up debt-free while paying about 75% to 80% of the total enrolled in the program after all fees are paid.

Debt Settlement Risks

Your creditors aren’t obligated to settle
If a creditor refuses to settle, you could end up having to pay accrued interest and late fees
Missed payments will show up on your credit report
You may have to report the forgiven amount as income tax to the IRS

Maine Debt Consolidation Companies

Looking for a debt consolidation agency to help you get a handle on debts? Here are a few firms that could help:

Best Overall: DebtHammer

DebtHammer helps borrowers overwhelmed by unsecured debts ranging from payday loans and tribal loans to credit cards and medical bills.

After a free consultation to review your situation, the DebtHammer representative will offer you a menu of options. You will decide on the course of action you prefer. These options may include debt settlement, debt consolidation, bankruptcy or others. DebtHammer requires a minimum debt of $7,500 for program enrollment or $1,000 in payday loans. The company charges 25% of the total enrolled debt.

READ MORE: DebtHammer review

Though based in Texas, DebtHammer currently provides solutions to residents of Maine, Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Illinois, Kansas, Louisiana, Massachusetts, Michigan, Montana, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Virginia, West Virginia and Wyoming. Some service options may not be available in all states.

Click here to schedule a free consultation.

More Maine Debt Relief Companies

Alleviate Financial Solutions 4 Park Plaza Suite 1500, Irvine, CA 92614 (800) 308-2935; alleviatefinancial.com
Guardian Litigation Group: 17922 Fitch Suite 150, Irvine, CA 92614 (949) 312-4226; guardianlit.com
New Era Debt Solutions: 330 Wood Rd., Suite B Camarillo, CA 93010 (805) 303-8773; neweradebtsolutions.com
Global DS 675 W Indiantown Rd. Jupiter, FL 33458-7555, (866) 677-5044; globaldsgroup.com
InCharge Debt Solutions: Orlando, FL (800) 565-8953; incharge.org
Golden Financial Services Debt Settlement Corporation: Lake Worth, FL, (619) 600-5189; goldenfs.org
National Debt Relief 180 Maiden Ln 30th floor, New York, NY 10038 (800) 300-9550; nationaldebtrelief.com
DebtBlue: 1125 E Campbell Rd Suite 200, Richardson, TX 75081 (855) 269-9462; try.debtblue.com

Maine Debt Settlement Attorneys

Lhommedieu Law Office: 190 Bates St, Lewiston, ME; (207) 786-5244; www.lewistonlaw.com
McCue Law Office: 40 Western Ave, Hampden, ME; (207) 261-0745; www.mccuelawoffice.com
Bourget & Banda: 185 State St, Augusta, ME; (207) 623-3731; www.lawyersaugustamaine.com
Litalien Law, PLLC: 413 Alfred Rd, Biddeford, ME; (207) 518-8181; www.litalienlaw.com
Law Office of J. Scott Logan, LLC: 75 Pearl St #212, Portland, ME; (207) 699-1314; www.southernmainebankruptcy.com
Perry O’Brian: 46 Columbia St, Bangor, ME; (207) 942-4697; www.obrianbankruptcylaw.com
Goodspeed & O’Donnell: 10 Summer St, Augusta, ME; (207) 622-6161; www.goodspeedandodonnell.com
Bourget & Banda: 185 State St, Augusta, ME; (207) 623-3731; www.lawyersaugustamaine.com
Law Office of James D. Wade: 57 Portland Rd Unit 3, Kennebunk, ME; (207) 502-7181; www.jdwadelaw.com
Ranger Copeland French, P.A.: 20 Federal St, Brunswick, ME 04011; (207) 725-5509
UpRight Law: 1 Center St, Waterville, ME; (877) 927-5451; uprightlaw.com
Bopp & Guecia: 121 Main St, Yarmouth, ME; (207) 846-6111; www.boppguecia.com
Law Office of Karen JM Mitchell: 733 Roosevelt Trail, Windham, ME; (207) 858-5270; www.karenmitchellesq.com

Eligible Debts

When seeking debt relief in Maine, it’s important to note that not all types of debt are eligible. Debts that can be included in the state’s debt settlement programs include:

Credit cards
Department store cards
Signature loans
Personal lines of credit
Old repossessions
Other unsecured debts
Old judgments
Private student loans in default

Ineligible Debts

Debts that don’t typically qualify for debt settlement include:

Home mortgages
Federal student loans
Car loans
Other secured debts
Credit Union debts
Medical bills

3. Debt Management

Works best for: People with primarily credit card debt. Many credit counseling agencies work exclusively with credit card debt (and thus won’t be a help if you need to consolidate medical bills or student loans).

A debt management program will usually reduce the interest rates on your credit cards from the current average of about 20% to somewhere around 9%. This will lower your monthly payment. However, unlike debt settlement, you will repay the full amount you owe, plus a lower amount of interest. The program usually takes 3-5 years to complete.

Pro tip: It’s important to note that only 55% to 70% of customers who enroll in DMPs successfully complete the program. If you enroll in a Debt Management Plan but don’t complete it, your financial situation could worsen.

So, for example, if you had $5,000 in credit card debt and were paying 25% interest, your monthly interest rate would be $105. If you reduce the interest to 8%, you’ll pay $33 a month in interest. That’s a $72 savings that you could apply to reducing your debt and paying it off faster.

These programs are usually set up and administered by nonprofit credit counseling agencies.

Like with debt settlement, debt management does not involve a loan. Credit scores won’t matter. But if you default on payments, your creditor could raise the interest rate back to its original amount.

Credit Counseling Agencies in Maine

Consumer Credit Counseling Services: Bangor, ME 04401; (207) 947-9933; www.consumercredit.com
A American Debt Consolidation: Portland, ME 04101: (207) 775-7790; florida.adr-debtconsolidation.com
Wolfgang Stuart: 14 Main St, Brunswick, ME 04011; (207) 259-4895; wolfgangstuart.com
ScoreMinders: 79 Eagle Ridge Rd, Brewer, ME; (800) 586-3052

4. Bankruptcy

Works best for: People who can see no other way to get out of debt within the next five years, who’ve already suffered significant credit score damage or who’ve tried one or more of the other options and failed.

There are two types of bankruptcy:

Chapter 7: Your non-exempt assets are liquidated by a court-appointed trustee and the money is used to repay your debts. Some assets are exempt, including Social Security, your home, pensions and your car.
Chapter 13: You keep your assets but are on a payment plan to make regular payments toward your debt. All of the repayments go through your bankruptcy trustee.

In Maine, to pass the Chapter 7 means test, you must:

Have a total monthly income of less than $7,475
If your total monthly income is over $12,475, you aren’t eligible for Chapter 7
If your income falls between the two numbers, other factors will need to be calculated

READ MORE: Types of bankruptcy explained

Maine Bankruptcy Exemptions

Maine does not allow the state’s residents to use federal bankruptcy exemptions. Instead, the state has its own list:

Homestead: Single Maine residents with no qualifying dependents can exempt up to $47,500 of your home’s equity. The amount doubles if you’re married or have dependents who live with you. This exemption can also be applied to a burial plot.

Personal property: Maine’s exemptions are more specific than the federal requirements, with most having a specific dollar amount attached.

For example:

Vehicle: Up to $5,000 in equity
Jewelry: Up to $750
Animals, books, clothing, crops, household goods, furniture, appliances: Up to $200 each
Commercial fishing boat: One
Commercial wood hauling equipment: One of each type
Cooking stove: One
Farm equipment
Food supply to last up to six months
Health aids: Must be professionally prescribed
Tools of the trade: Up to $5,000
Wildcard: Filers can exempt another $400 in property not covered by other provisions.
Wages: There is no wage exemption. However, you can use part of your unused homestead exemption to safeguard savings accounts or unspent wages.
Pensions: Almost any pension or retirement account deemed necessary is exempt. Please check with an attorney to learn more.

Pro tip: If you didn’t use your full homestead exemption, you can use up to $6,000 to protect tools of the trade, household goods, furniture, appliances, and personal injury awards.

Other exempt benefits include:

Alimony or spousal support
Child support
Child tax credit
Crime victim reparation
Disability or illness benefits
Earned income tax credits
Group health or life policy or proceeds
Public assistance benefits
Social Security benefits
Veterans benefits

Again, this is not a complete list. Please consult your bankruptcy attorney to learn more about other exemptions.

Debts that Aren’t Discharged by Chapter 7 Filings

Nondischargeable debts include alimony and child support, some taxes and fines, some student loans, debts for death or injury caused by driving while intoxicated, and any debts you fail to disclose in your bankruptcy petition.

Bankruptcy will stay on your credit report for seven to ten years and could knock your credit score down by as much as 200 points.

However, that does not mean you won’t be able to borrow money for that entire period. As years pass, lenders will be more forgiving and you’ll have a better shot at loan approval.

What is the Statute of Limitations on Debt in Maine?

The statute of limitations is how long a creditor can take you to court to collect unpaid debts. This period begins as soon as you miss the initial payment on a debt that’s due. In Maine, the amount of time depends on the type of debt you have:

Oral agreements: 6 years
Written contracts: 6 years
Promissory notes: 20 years
Open-ended accounts: 6 years

Auto loans have a statute of limitations of 4 years.

Contact: Maine Attorney General Office.

After the statute of limitations expires, the debt becomes “time-barred.” This means the original creditor can no longer collect on it. At this point, the court can’t order you to repay the debt either. Debt collectors also can’t garnish your wages or place a lien on your car or home.

You’ll still legally owe these debts. Also, debt collectors can still contact you via phone or letter to get you to pay.

Debt Collection Laws in Maine

Maine residents are protected by the Maine Fair Debt Collection Practices Act, which generally mirrors the protectionss of the federal Fair Debt Collection Practices Act.

Under the FDCPA, neither creditors nor debt collectors can:

Use deceptive, abusive, fraudulent, or manipulative tactics to collect debts.
Use force or violence to get borrowers to pay their debts
Contact a borrower’s employer about a past-due account unless a prior agreement was made or they have a judgment
Sell or otherwise disclose private information to a third-party agency
Harass borrowers at home or work about the debt
Contact borrowers outside of standard business hours (9:00 p.m. to 8:00 a.m.) without consent
Intentionally misrepresent information

You have the right to contact a debt collector and tell them to stop contacting you, but it must be done in writing.

Debt collectors and creditors must also provide written notification with details relating to the debt within five days of contacting the borrower. If you’ve been contacted about a debt you might not owe, you have 30 days to dispute it with a debt verification letter. In the letter, write that you don’t owe the debt and that they must provide written proof before anything else happens. However, if the collector sends you proof that you owe the debt, the debt collector is allowed to resume collection efforts.

If you owe several debts, any payment you make must be applied to the debt you choose. A debt collector is not allowed to apply your payment to any debt you believe you do not owe. If you believe the law was violated, you have the right to sue a debt collector in a state or federal court.

If you aren’t certain whether your rights have been violated, contact the Maine attorney general’s office to learn more about the differences between the Maine laws and the federal FDCPA.

Where to Make a Complaint in Maine

Consumer complaints are handled through the Consumer Protection Division of Maine’s attorney general’s office. Many consumer issues can be resolved at no cost through the state’s Consumer Mediation Service.

How to Contact the Attorney General’s Consumer Information and Mediation Service

6 State House Station, Augusta, Maine 04333
Phone: (207) 626-8849 or (800) 436-2131
Link to website: https://www.maine.gov/ag/consumer/complaints/complaint_form.shtml

More Maine Debt Statistics

	Maine average	National average
Average salary	$55,960	$59,428
Median household income	$63,182	$70,784
Per capita household income	$36,171	$36,430
Unemployment	2.7%	3.5%
Household debt	$49,740	$59,580
Auto loan debt	$20,252	$22,612
Credit card debt	$5,442	$6,194
Mortgage debt	$160,326	$236,443
Median mortgage payment (30-year fixed)	$1,464	$2,823
Average student loan debt	$33,137	$37,338
FICO credit score	727	714
Average VantageScore	706	701
Retirement savings	$403,751	$255,000
Child poverty	13.99%	5.2%
Overall poverty	10.8%	11.6%
Bankruptcies in 2022	534	89,224
Foreclosures (2022)	555 (in the first half of 2023)	248,170
Identity thefts reported	103	1,108,609
Percentage of unbanked and underbanked residents	1.3%	25.6%
Average credit utilization ratio	25%	31%

Payday lending status in Maine: Legal

Interest rate (APR): 217%
Minimum loan amount: None
Maximum loan amount: $2,000
Minimum loan term: None
Maximum loan term: None
Database Loan Tracking: No
Finance charges: Less than $75: $5; $75 to $250: $15; More than $250: $25

Debt Resources for Maine Residents Facing Hardship

Maine offers a variety of local and state programs for residents looking for help with debt or finances. Among other things, these resources can provide low-cost or free childcare, job-related education and training, healthcare, and legal aid. Some programs can also help with the cost of rent or utilities.

Some of the main food banks in the state include:

Good Shepherd Food Bank: 3121 Hotel Rd, Auburn, ME; (207) 782-3554
First Baptist Church Food Pantry: 360 Canco Rd, Portland, ME; (207) 773-3123
Augusta Food Bank: 161 Mt Vernon Ave, Augusta, ME; (207) 622-5225
Bath Area Food Bank: 807 Middle St, Bath, ME; (207) 737-9289
Poland Community Church Food Bank & Thrift Shop – Food Distribution Center: 1208 Maine St, Poland, ME; (207) 998-4069
South Portland Food Cupboard: 130 Thadeus St, South Portland, ME; (207) 874-0379

How to Apply for Unemployment Benefits in Maine

You should file for unemployment as soon as you become unemployed, but you cannot file until your final workday has been completed.

When filing a new application, you should contact the Maine Department of Labor.

To file, you will need:

An account in ReEmployME
Your Social Security number
Your Alien Registration and expiration date
Employment Iinformation
A valid email address

State Hardship Programs

The Maine Department of Health and Human Services offers a number of programs to help people facing financial hardship.

Some of the programs include:

Home Weatherization Program: Reduces energy costs and improves comfort for income qualified households by increasing the energy efficiency of their homes, while ensuring their health and safety.
CHIP: Children’s Health Insurance Program is designed to help low-income families obtain affordable health care for their children. It includes certain services, like medicine and hospital care.
TANF: The Temporary Assistance for Needy Families (TANF) program provides temporary financial assistance for pregnant women and families with one or more dependent children. TANF provides financial assistance to help pay for food, shelter, utilities, and expenses other than medical.
SNAP: SNAP is available to help low-income households subsidize their food costs. Apply for a reloadable card and use it like you would a debit card at most grocery stores.
WIC: The Women, Infants and Children program is designed to help certain people, including low-income women with young children, afford food costs. Most people who qualify for SNAP or TANF benefits also qualify for this program.
LIHEAP: The Low-Income Home Energy Assistance Program is federally funded and helps income-qualified families with heating and cooling costs.
CAFCP: The federal Child and Adult Food Care Program reimburses eligible organizations and daycare home providers for nutritious meals served in care settings. The program is administered by the U.S. Department of Agriculture.

Cost of Living in Maine

Annual Mean Wage (All Occupations)	$64,767
Median Monthly Rent	$873
Value of a Dollar	$1.26
Cost of Living	111.5
Cost of Living Rank	13
Grocery Cost Index	101.2
Housing Cost Index	118.9
Utilities Cost Index	108
Transportation Cost Index	112.8
Miscellaneous Cost Index	112.8

Source: World Population Review (updated October 2023)

The Bottom Line

Maine residents benefit from stable employment and a high minimum wage, but many families still struggle due to high housing, utility and transportation costs.

If you’re having trouble making ends meet, you have some options and now is the time to take action. Your situation will only continue to worsen as overdraft fees, late fees and interest charges continue to mount.