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Scott

Lori Scott, a certified credit counselor, talks about the different types of debt Siouxlanders are struggling with and how Center For Siouxland can help them in her office.

SIOUX CITY -- For a while, most Siouxlanders are able to juggle debt by using credit cards to cover food, gas and other monthly essentials.

But eventually, Lori Scott, a certified credit counselor at Center For Siouxland, said they get to a point where they're unable to make payments on that debt.

"Student loans become a huge problem for people of any age. It's not just brand new kids out of college. It's people in their 40s and 50s still struggling. They feel like there's just no end in sight," said Scott, who said people of all income levels are affected by debt. "They get scared and don't know how to handle it, so then they put those bills in a drawer and just think they're going to go away."

Wage stagnation and rising housing costs may lead some to turn to payday loans, but Scott said others, who have higher paying jobs, are falling into the same trap.

"They're used to a certain lifestyle, or maybe they have overtime that they get consistently and all of a sudden they no longer get overtime, so their income is lower and they end up trying to figure out how to pay their bills and then they take out a payday loan thinking it's going to help them."

In the past, the only way to obtain a payday loan was by visiting a local payday loan store. Since payday loan lending has expanded online, Center For Siouxland executive director Jonette Spurlock said more people are falling into the payday loan trap.

"The limits online are a little bit higher than at the brick and mortar places," she said. "It seems to be our older population getting into that payday loan cycle."

Scott said that cycle can last years, with individuals traveling from payday loan store to payday loan store. 

"Somebody thinks, 'I'll get a loan for $300 and then I'll be able to pay it, because my next check is going to be $500,'" she said. "What happens is, they pay that off, but they don't have enough to pay their bills. We'll see people in here that end up with four payday loans. They take out one in order to pay the next one that's due."

If you're buried in debt, whether that be student loan debt, medical debt or payday loan debt, help is available to dig yourself out. Center For Siouxland offers a free, confidential consumer credit counseling program.

"Debt is such a private thing, everybody is so embarrassed to say, 'I have money issues,'" Scott said. "They keep it inside because they don't want other people to see the issues that they're struggling with."

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Budget

A sample budget is shown on certified credit counselor Lori Scott's computer at Center For Siouxland.

Center For Siouxland counselors help clients put together a monthly budget, obtain and improve their credit scores and develop a plan to pay down debt.

Filing for bankruptcy may not be the only option for people shouldering a heavy debt burden, according to Spurlock, who said Center For Siouxland also offers a debt management plan. Clients make one payment a month to the nonprofit human service agency, which in turn pays out to the clients' creditors. Counselors also work with clients' creditors in effort to lower their interest rates.

Scott said debt management shouldn't be confused with debt consolidation or settlement.

"Debt settlement is the other one we try to help people avoid, because people will see advertisements on TV or hear them on the radio about lowering debt. Really, what that is is companies asking a monthly fee from the client. They hold that debt and they hold that money and they don't make any payments to your creditors," she said. "They wait until they go into collections, and then they try to settle on that debt. In the meantime, it's really ruining your credit."

Scott said some clients find that they can handle debt payments after creating a budget and identifying places where they can reduce expenses.

"Sometimes, it's just really cutting back in the budget and they're able to manage those payments on their own," she said. "They just needed help getting a plan."

When all else fails, Scott said Center For Siouxland counselors can provide referrals to bankruptcy attorneys.

"We want them to know their options," she said. 

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Health and Lifestyles reporter

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