Those who live in California aren’t all surfers and movie stars, and not everyone lives in a mansion or stars on reality television about their excessive lifestyle. Some residents in this state are in debt more than they can afford to pay. Many live well below the poverty line, and many people make less than you might imagine. Some people don’t make enough to get through the week without struggling, and there are always people who can’t afford to pay their bills on time.
It’s true the median household income in California is more than the national average. The US boast a national median household income of $55,775 while California’s household income is $64,500. Despite this large annual income, the poverty rate in California is 15%. It ranks 17th on the national list of states with the highest poverty rate. The state has the largest economy in the nation, but many people aren’t able to boast they profit from that. The income disparity in this state is one of the biggest in the nation, with the wealthiest county being Marin County in terms of median family income, which is $120,000. That’s followed by San Mateo with just over $108,000 and Santa Clara with $106,000. The poorest counties include Siskiyou with an annual median family income of only $46,000 as well as Imperial County.
Those who cannot afford to make ends meet are desperate for financial help, which can be found by way of debt settlement. If you think it might be for you, you should educate yourself on what it means, how it works, and what you need to do to qualify.
Debt Settlement Benefits in California
Before you begin a debt settlement program with any company in California, it’s important to realize it’s not for everyone. There is an ideal candidate for debt settlement, and you might not fall into the category. Someone who should apply for debt settlement has more than $7,500 in unsecured debt, has missed more than one payment to creditors, who has low income and struggles to make ends meet, and who has no other option. If you don’t meet these requirements, this is not the program for you.
Missing payments is essential. No creditor will voluntarily reduce the amount a consumer owes them if they don’t show any financial burden. Missing payments is a must if you want to settle your debts. Don’t stop paying your bills to qualify for debt settlement. The effect it has on your credit score is immediate, and it affects your credit score for seven years before it goes away. Can you afford to have bad credit for seven years?
If you have made late payments or missed them all together, you should consider the many benefits of debt settlement.
- Lower interest rate
- Only one interest rate
- Only one payment
- Debts are settled for less than you owe
- Financial relief
- No more negative credit reporting
The benefits are numerous, but only if you’re already struggling. Debt settlement companies contact your creditors to negotiate a lower pay-off amount for you. They can get your debts settled for as much as 40% less than what you owe. Your accounts are closed, no more debt accrues, and your creditors no longer report late or missing payments to the credit bureaus. This makes your credit score stay where it is rather than dropping further. It’s a great option, and it can help your financial life significantly over the course of the next few years.
Debt Settlement Regulations in California
The law requires all debt collectors, all debt settlement companies, and all consumers adhere to specific requirements in California. Each one is designed to best protect all involved in the settlement process, and there is no way around any of them.
- $7,500 or more in debt
- Debt keeps growing
- Only unsecured debt can be added
- Creditors have the right to refuse settlement offers
There are strict debt laws associated with being eligible to settle debts in California. The first is the amount and type of debt you owe. It must be at least $7,500 in unsecured debt. This is debt without collateral. A house and a car are both considered collateral. Personal loans, credit cards, and medical bills are unsecured debts. They can be settled, but you cannot add your property, your car, or your home to the mix to consolidate or settle any debts.
What surprises many consumers is how often debt collectors tell settlement companies no. They aren’t required to settle any debts with anyone, and they have every right to say they’re not going to accept an offer. They can also negotiate offers legally. It’s imperative everything comes in the form of a written contract before you can consider it valid, or you might end up with bigger problems in California.