What to Know About Debt Relief in California

California is a state known for its beautiful landscapes, largely pleasant climate and wealth of things to do — whether you’re exploring a city or heading out into nature. But as much as this state has to offer to its residents, it also comes at a literal price.

According to rankings from U.S. News & World Report, California ranks 49th out of 50 in terms of affordability. This scale looks at factors like how much it costs to pay for housing and daily life expenditures compared against household incomes.

In a state with such a high average cost of living, it can be difficult for people just to stay afloat. In fact, they may lean more heavily on credit cards to pay for living expenses — a move that can temporarily help them afford things, but which may fuel a cycle of mounting credit card debt that’s very difficult to escape over time.

Many Californians are exploring their options for getting out of debt, including various debt relief strategies. Here’s what to know about debt relief in California.

When Debt Relief in California May Be the Right Choice

The first step is determining which debt relief strategy aligns best with your financial situation.

Debt consolidation is one family of strategies all centering around making debts both simpler and less expensive in terms of interest. A number of California debt relief strategies involving consolidation that are worth exploring further include:

  • Getting a debt consolidation from a bank or online lending company to wipe out costlier debts, like high-interest credit cards.
  • Working with a credit counseling agency to undergo debt management, a three- to five-year plan for streamlining debts into one monthly payment and lowering interest rates.
  • Transferring current credit card balances to a new card with zero-percent interest for a limited time. This provides a repayment window in which interest stops accruing.

Debt consolidation offers a number of ways to address debts but may also require a good credit score to qualify. What about the many Californians with fair or poor credit?

Debt settlement may be a better fit for borrowers who have already experienced credit rating damage due to late payments. As Forbes outlines, this form of debt relief involves negotiating with creditors. If they will agree to a lower settlement than what you originally owed, the remaining balance gets canceled. Results may vary, but some consumers are able to cut their debts in half — or at least reduce them by a significant percentage. Keep in mind that if you work with a debt relief organization, you’ll be responsible for paying a fee to the company following each successful settlement.

Learn More About Handling Debt in California

Understanding the nature of your debts, as well as the risks associated with various debt relief strategies, is key to achieving your financial goals. Case in point: Your credit score directly affects your ability to get approved for consolidation products like a loan or balance-transfer credit card, so knowing how to optimize it before applying is key. Another example: Debt settlement does not put an end to debt collectors, so it’s useful to know your rights so you can advocate for yourself and stop excessive communications.

The Attorney General office offers Californians a hub for information on money, credit and debt covering these topics and more. Do your research before diving into any debt relief strategy.

California is an expensive state in which to live, so it makes perfect sense why so many in the Golden State are seeking respite from serious debt. Exploring various debt relief options can help you find a path forward.

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