California Debt Consolidation Programs: How Do They Work?June 13, 2023
While California ranks fourth in the nation’s top ten states for a healthy economy, it’s no secret that it’s an expensive place to live. And that means that as far as the cost of living goes, it can be found at the other end of the rankings. Out of 50 states and the District of Columbia, California comes in at 49th place making it one of the priciest states in the country. Californians struggling with debt may benefit from credit card consolidation.
When buying or renting a home, California residents pay the highest rent and the third highest home prices in the nation. Groceries, utilities, transportation, and healthcare costs are also higher than most other states. So if the economy is healthy and the cost of living high, it follows that many California residents make a decent living.
The median California household income in 2019 was $75,315, which is $11,627 higher than the median numbers for the country as a whole. But even with a flourishing economy and above-average household incomes, thousands of California residents still find themselves with massive debt.
Debt consolidation loans may be a smart choice for you if you can get an interest rate that’s lower than you’re currently paying. However, before you consider this option, make sure you can check the following boxes: you’ll need a clean credit history, a good credit score, a reliable income source to pay back the loan, and a reasonable debt-to-income (DTI) ratio.
California Debt Consolidation Loans
Household debt in the US is near the lowest levels ever recorded. But California residents have another tale to tell. Folks who call the Golden State home have the highest Debt Balance per Capita (based on those who have a credit report). According to the study, each Californian holds close to $70,000 in household debt, which includes credit cards, mortgage, auto, and student loans.
As of 2017, California residents held, on average, $8,971 in credit card debt. And 8.37 percent of those Californians were delinquent in their monthly payments. In certain areas of the state where household incomes are lower, it’s not surprising that credit card debt and delinquency rates are higher. Regardless of which part of California you call home, if you’re in debt, there are a variety of solutions to your problem.
Is Debt Consolidation the Right Choice?
While debt consolidation makes sense for many residents of California, it’s not the best debt-clearing strategy for everyone.
It makes sense if:
You have good-to-great credit
You can avoid ending up back in debt
You’re in significant debt and it’s growing
You’re paying high-interest rates on your cards
There may be better solutions if:
You have poor or bad credit
You’re still experiencing a specific debt-causing situation like divorce or job loss
Your debt-to-income ratio is too high
Your credit score’s too low
You’re unable or unwilling to change your spending habits
Credit card debt consolidation can help you pay off your debt faster if it reduces your interest cost. But debt consolidation does not reduce the amount you owe.
Credit Card Debt Settlement Might Be a Better Solution
Credit card debt settlement might be the right option for Californians experiencing any of the problems listed above. A debt negotiation program may be able to decrease your monthly payment and reduce the amount that you owe. The program aims at getting your credit card issuers to accept less than the amount you owe as payment in full. Understand that no creditor is obligated to settle your debt, but many consumers do get their credit card balances reduced by settling with credit card companies.
California residents can call Freedom Debt Relief at 800-910-0065 for a free debt evaluation to find a solution that is right for them.
Request a free debt evaluation to find out how we could help you:
- Resolve your debt faster
- Significantly reduce what you owe
- Make one low monthly program payment
California Statute of Limitations
The Statute of Limitations was devised to help people and businesses avoid being sued for an old debt that they were unable to pay off. It made more sense economically to let debtors get on with their lives as opposed to being harnessed to the unpaid debt forever.
For all debts in California, the statute of limitations is four years except those made with oral contracts. For oral contracts, the statute of limitations is two years. This means that for unsecured debts like credit card debt, lenders cannot attempt to collect debts that are more than four years past due.
Find Your Solution
So…you’ve taken a close look at your situation and decided that a debt consolidation loan is not the right choice for you. Some of the other options Freedom Debt Relief offers may work better for you. Over half a million American consumers have enrolled in our program to help solve their debt problem. Regardless of which approach you settle on, you’ve taken a step in the right direction by starting to explore the available options. There’s no one-size-fits-all solution, as everyone’s situation is unique. But Freedom Financial Certified Debt Consultants can walk you through the various options to help you know if debt consolidation is a viable option for you.
Take the next step and find out if debt relief with Freedom Debt Relief could be the solution to your debt problem. Request a free, no-obligation debt consultation with a Certified Debt Consultant by calling 800-910-0065 now.
How people in California are handling debt stress
When you’re struggling with debt, your credit score can suffer, making it harder to access affordable credit if you need it. This cycle forces many borrowers to spend a lot of time and a lot of money getting out of debt. Last month, 50% of people in California seeking relief from their debts had credit scores under 600. A credit score below 600 makes it difficult to refinance debt in a way that allows you to make more headway with each payment. The average credit score in the U.S. is 714. Folks struggling with debt are being hurt by high debt loads and late payments.
A maxed-out credit card can lead to a cascade of negative consequences. Declined transactions, harm to your credit score, high interest charges, and a cycle of debt that can be hard to break. The majority of California consumers who use Freedom Debt Relief services are using at least 70% of their credit limits. At least 17% are maxed out.
Seventy-six percent of Californians seeking debt relief last month had at least one account that’s past due. Late accounts often drive people to figure out a way to get rid of their debts.
Most people seeking debt relief in California are 36-50 years old. This age group accounted for 36.2% of all Californians applying for debt relief last month.
The Urban Institute recently reported that 64 million people with a credit file have at least one account in collections (that’s about one-fourth of adults in the U.S.) But you don’t have to be in default to start thinking about ways to improve your financial situation. More than 24% of people in California looking for help with their debt last month reached out before even one account was past due.
Freedom Debt Relief offers strategies tailored to each individual’s situation, like making an aggressive payment plan, getting a debt consolidation loan, or negotiating with your creditors to accept less than the full amount you owe.
End Your Debt
Find out how our program could help.
- One low monthly program deposit
- Settlements for less than owed
- Debt could be resolved in 24-48 months