Debt Consolidation: Fresno Residents Have Options Available

BY Jane MeggittMay 30, 2023

Key takeaways:

  • Fresno’s relatively high unemployment rate can make it challenging for many residents to pay their debts. 

  • Debt consolidation involves taking the unsecured debt a person owes and rolling it into one monthly payment. This monthly payment usually has a lower interest rate. 

  • Debt consolidation is available for credit card, medical, or other unsecured debt.

With annual sales exceeding $3 billion, Fresno is the nation’s number-one-ranked county for agriculture. It’s a diverse community, with more than 70 ethnic groups in the Fresno metropolitan area. With a population of approximately 544,000, Fresno's employment base comprises about 46,000 farm employees and 350,500 non-farm workers. 

Fresno’s unemployment rate stood at 8.10%. California's unemployment rate is 4.3%, far above the national unemployment rate of 3.5%. The unemployment rate has steadily increased in Fresno, making it difficult to keep up with debts. A 20.6% poverty rate makes many Fresno residents financially challenged. The good news is that the poverty rate has declined since 2014.

In Fresno, 47.6% of homes are owner-occupied. A home equity loan is a debt consolidation option for those homeowners, but those who aren’t homeowners also have options. 

What is debt consolidation?

If you have various creditors to whom you make payments every month, debt consolidation allows you to combine these debts into one monthly payment. For debt consolidation to make sense, you should receive a reduced payment amount, lower interest rates, or both. There are several methods of consolidating debts, and the right fit for you depends on your unique circumstances. 

Debt relief options in Fresno

Credit counseling

Professional advice in the form of credit counseling can enable you to get your finances under control. Credit counselors focus on your money and debts and putting together a budget. Credit counselors may help you negotiate with creditors regarding payment plans or other forms of debt settlement. They may help get your interest rates or payments reduced. However, your outstanding balances aren't reduced. Credit counselors usually offer debt management programs as well.  

Home equity loans

For Fresno homeowners, a home equity loan can help with debt consolidation. The equity in your home is the property’s market value minus what you still owe on your mortgage. It is the value of what you own—rather than the whole value of your home. If you own your home outright, with no mortgage or other liens, you have 100% equity. 

Many lenders limit the amount of a home equity loan to 80% of your equity. The amount you can borrow depends on your home's market value, credit history, and income. 

Some homeowners use home equity loans to do repairs or pay for their children’s college tuition. But most of these loans are used for debt consolidation.

There are risks involved in borrowing against your home. You could lose your home to foreclosure if you can’t repay the loan.

Debt consolidation

With debt consolidation, various unsecured debts are collected into one loan with one monthly payment. While debt consolidation doesn't reduce the amount you owe, it usually allows you to pay less interest and make lower payments. 

You can use a home equity loan or balance transfer to reduce debt. Get a low promotional APR, annual percentage rate, on the transfer amount to save money. For example, for a $1,000 loan at 10% APR, you'd pay back $1,100.

Another option is a debt consolidation loan, taken out to combine and pay down debts. Whatever your choice, it’s wise to consider debt consolidation before serious financial problems arise.  

Debt settlement

When the amount of your credit card or other unsecured debt is substantial, debt settlement might prove an option. Also known as debt relief, debt settlement companies negotiate with your creditors to reduce the amount you owe. That amount is the settlement of your debts. 

To pay the settlement, you put a specified monthly amount in an account managed by an independent third party. The process can take years. 

A debt settlement company must tell you how long it'll take and how much money you must put aside before the company makes an offer to each of your creditors. Pay attention to the fees, terms of service, and any conditions. 

How people in California are handling debt stress

The debt cycle forces many people to spend many years and a lot of money getting out of debt. Debt can hurt your credit score, too, making it even harder to break the cycle. About 50% of consumers in California who looked for relief from their debts last month had credit scores under 600. If your credit score is below 600, there aren’t many options for refinancing your debts to a lower rate that'll help you pay it down faster. Experian says the average credit score in the U.S. is 714, and we know that many people with lower scores are being hurt by late payments and high credit card balances  

Even a single maxed-out credit card can have multiple negative effects on your financial health. Besides hurting your credit score and costing you a fortune in interest charges, the maxed-out card leaves you without available credit that you could lean on in a financial emergency. High balances are a red flag. Most people in California who started a Freedom Debt Relief program last month are using at least 70% of their available credit, and 17% have one or more maxed-out cards.  

Collection accounts are another warning sign that debt is becoming unmanageable. In California last month, 76% of consumers looking for debt relief had at least one past-due account. That makes sense, since being unable to keep up is often what drives someone to reach out for help.  

The biggest group of people seeking debt relief in California is 36-50 years old. Of all Californians applying for debt relief last month, 36.2% were in this age group. 

It’s never too early or too late to start looking for ways to get rid of your debt and improve your finances. You don’t have to be in trouble to know it’s time to make positive changes. Although about one-fourth of American adults have an account in collections, last month, more than 24% of people in California reaching out for help didn’t have a single account that 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.

Debt consolidation and more in Fresno

While debt consolidation loans aren’t the right choice for everyone, they are a good option for many people facing financial challenges. Contact Freedom Debt Relief or call 800-910-0065 now for a free debt consultation.

Frequently Asked Questions

What about bankruptcy as an option?

For some people, bankruptcy is a suitable option for debt consolidation. While your debts are consolidated via bankruptcy proceedings, there are long-term effects. A Chapter 7 bankruptcy filing stays on your credit report for up to 10 years from the filing date—a Chapter 13 bankruptcy stays on your report for up to seven years. Federal law, not California law, governs bankruptcy.

Bankruptcy can affect more than your credit report. It can also affect future employment. While your current job isn't usually affected, it may harm your chances of obtaining a new job. That’s especially true if the position involves handling finances, such as bookkeeping or payroll. There are better debt consolidation options than bankruptcy.

Who should choose debt settlement?

Debt settlement differs from debt consolidation. With debt settlement, the debt management company negotiates with your creditors to reduce the amount you owe. However, creditors aren't required to negotiate with debt settlement companies.

Some debt settlement companies encourage clients to stop paying their credit card bills. If you do that, you'll be charged late fees, interest, and other charges. Those charges could eat up any savings the consolidation would have given you.

If your debt is truly overwhelming, consider debt settlement. ‌Deb consolidation is usually a better option, even if you owe a fair amount. Debt settlement can negatively impact your credit report and credit score. 

How do you choose a reputable debt consolidation company?

When you experience issues managing your debts, you may find yourself in a vulnerable position. It’s important to research whether that debt consolidation company is legitimate and can help you pay down debt and looks after your best interests.

Choose a debt consolidation company with a long history in the business. There's no sense in dealing with fly-by-night companies, no matter what they may promise. You need a debt consolidation company with proven expertise and a solid track record. Look for a company with a good rating from the Better Business Bureau. You can also contact your State Attorney General’s office and find out about consumer complaints on file. 

A reputable debt consolidation company is transparent about revealing fees and loan terms. Make sure you understand all terms and fees before signing the agreement. If you have questions, a good debt consolidation company answers all of them to your satisfaction.

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