For all its charms, California continues to have a notoriously high cost of living — especially for the many Americans living in the major metropolitan areas within this state. As of 2021, California ranks 48th out of all the U.S. states in terms of its cost of living index, with only Hawaii and the District of Colombia being more expensive. Housing and transportation were especially expensive categories for the Golden State.
A higher cost of living tends to go hand-in-hand with more debt, as it means Americans must often borrow more money to make ends meet in an expensive market. This means many Californians are currently searching for a way out of debt, particularly if they have made little headway trying to pay off debts little by little each month — only to find their balances and interest charges continuing to grow.
Are you looking for debt relief in California? Here are some suggestions on where to find such services and how to gauge the legitimacy of a company before signing a contract.
Exploring Debt Relief Options in California
There are a variety of different types of California debt relief available, each type with its own set of requirements, risks and benefits.
Options for Debt Consolidation Loans
One option is borrowing money to pay off your current loans. This loan will typically have a lower interest rate than your existing debts as well as a simple, fixed repayment schedule.
Californians can find personal and consolidation loans at a few different places, including:
- Local credit unions
- Online-only lenders
Steer clear of payday loans for consolidation, however. California does not have protections in place against them, and as a result the average interest rate on them is 460 percent. These may seem like a convenient option in a pinch, but they tend to make debt problems even worse in a major way.
Options for Debt Management
Another option for Californians trying to get a handle on debt is credit counseling. It’s generally free to attend an initial one-hour meeting with a credit counselor to go over your budget, financial goals and debt options. From there, you may decide to enroll in a debt management plan (DMP) facilitated by the credit counseling agency.
DMPs involve making one payment to the agency so it can in turn distribute those funds to your creditors, who will often agree to give you better interest rates when they hear you’re locked into a DMP. This strategy typically requires three to five years of consistent payments.
The Department of Justice maintains a list of approved credit counseling agencies by state, including for California.
Options for Debt Settlement
Californians with thousands of dollars in debts who have already fallen behind on payments, thus dragging down their credit score, may be seeking a more intensive strategy to save them from bankruptcy. Debt settlement, which can reduce the principal amount of your balances rather than just lower the interest rates, is worth researching.
Finding a legitimate debt settlement company with a proven history of helping clients is paramount to success. Start with searching organizations accredited by the American Fair Credit Council (AFCC). These members uphold certain standards and follow all applicable debt relief laws. Pro tip: The debt settlement company doesn’t necessarily have to be based on California; many programs accept eligible participants from around the U.S.
Finding debt relief in California is a matter of knowing your options and being willing to explore them before making a decision. Consolidation, management and settlement are all viable debt relief strategies on the table for consumers from California.