Discover your debt relief options in California with accredited experts at Alleviate Financial Solutions. From debt management and debt settlement to bankruptcy, find the right solution for your financial troubles. Contact us for a free consultation
Debt is no joke, and it’s even less so in California, which has the highest bankruptcy rate in the country. In fact, the state itself is in debt to the tune of $362.87 billion. Fortunately, there are several forms of debt relief services to help people get out of financial difficulty. Debt relief programs and services are easily available at debt settlement companies, banks, credit unions, and even some accredited nonprofit organizations.
Your Debt Relief Options in California
We’re going to look at the types of debt relief services available in California.
1) Debt Management
Debt management programs are about the most user-friendly of the options. They reduce credit card interest rates, which drops your monthly payments and enables you to settle credit card debt in 3-5 years. In some cases, a debt management plan can reduce interest rates by up to 30%.
However, if you miss a payment, you can be excluded from the program and spring right back up to your original interest rate.
2) Debt Consolidation Loans
Debt consolidation loans are recommended for people with a minimum credit score of 670. You should also be able to avoid the temptation to use your credit cards during the loan period. In essence, all your debt is consolidated into a single loan that is usually placed in an interest-free account.
You can also lower interest rates by putting up collateral, usually a secured loan like your house or vehicle. With collateral, it’s possible to reduce interest by 10–12 percent.
It’s possible to manage this type of debt relief strategy yourself.
3) Debt Settlement
Debt settlement, or debt resolution, is a bit of a catch-22. Debt settlement programs entail negotiations with your creditors to reduce the amount you owe in exchange for full payment of the agreed-upon amount. Once the amount is paid, typically in one lump sum, you’re officially debt-free.
However, your credit rating will be badly affected because the payment will be noted as not being the full amount. Furthermore, the note will continue to impact your credit score for seven years.
There are two more factors to consider:
1) The amount of money you save will be considered “income” and taxed.
2) You stop all payments during debt negotiations, which are noted as late payments. Late payment penalties are included in the reduced amount, which means you won’t get as much as you might expect. For example, your debt settlement negotiator might successfully reduce the amount owed by 50%. Once you factor in late payment penalties and debt settlement fees, you might only get 20% off your debt.
Again, this doesn’t mean that debt settlement is bad, especially for people living under a mountain of debt. It’s also a good option if you want to avoid bankruptcy.
Remember, it’s far better to trust an experienced debt settlement or debt resolution service provider that knows the system and has contacts to secure the best interest rate possible. Make sure that the National Foundation for Credit Counseling or the Financial Counseling Association of America authorizes the debt resolution company.
Nonprofit Debt Settlement
A nonprofit credit counseling agency manages this type of settlement. A very important difference between nonprofit debt settlement and standard debt settlement plans is that nonprofits have agreements in place that guarantee you get 40–50 percent off your debt. The proviso is that the amoube is paid within 36 months.
One of the biggest benefits of this type of program is that there is no negotiation, so there’s no risk of accumulating late payment penalties.
As with debt management, if you miss a payment the deal is off. It’s also not possible to get an extension beyond three years. Inevitably, the settlement plan will also reflect negatively on your credit score due to partial payment.
Bankruptcy
Bankruptcy is the final option for those who need debt relief. The word has terrifying connotations because many people think there’s no recovery after bankruptcy. This isn’t true. Some things will be more difficult, like applying for credit, but that might not necessarily be a bad thing if you’re still learning the art of financial management.
It’s critical that you learn how to manage your personal finances properly for two reasons.
1) It will be very difficult to secure credit and if you do, your interest rate will be higher than the average loan.
2) If you don’t figure out how to keep your credit under control and your debt spirals away, you can only file for bankruptcy again after eight years.
Bankruptcy also stays on your credit score for up to ten years.
There are two types of bankruptcy:
1) Chapter 7 bankruptcy
A specially court-appointed trustee takes charge of your case. Your assets will be assessed and assigned a value. Value is weighed against debt, after which assets will be sold to settle outstanding balances. As a rule, your home is excluded.
2) Chapter 13 bankruptcy
Your assets will be safe as long as you create a structured plan that enables you to settle your debt through consistent payments.
You can only file for bankruptcy in federal court. It’s not suited for a DIY approach. You really want to get an accredited financial assistance provider who specializes in the bankruptcy process on board.
Note, not all your debt or lapsed financial obligations are included in bankruptcy cases. You still have to pay child support, tax debt is still due, and student loans still need to be paid off.
Accredited Debt Relief Could Be Yours
No one enjoys being in debt. Everyone wants to get out of debt as quickly as possible. You need someone intimately familiar with the ins and outs of debt and debt relief. You also need someone you can trust. Alleviate Financial Solutions is an accredited company that specializes in all aspects of debt relief.
If you find yourself in an unfortunate position and need expert debt help, call (800) 308-2935 and we’ll set up a free consultation to assess your situation and come up with a workable solution.
