In today’s economy, it can be easy to quickly accumulate debt. Unfortunately, sometimes that debt can pile up to the point where it feels like there is no way out. If you’re dealing with an overwhelming amount of debt in California, there are options out there that may be able to provide you with some form of relief.
Here is everything you need to know about debt relief, what it can do, and how to qualify for it in California.
What Is Debt Relief?
Debt relief is a process that allows individuals with large amounts of debt to either settle, consolidate, or slow down their accumulation of debt. Many people opt to use a debt relief method over filing for bankruptcy, as it can have less of an impact on their credit and also make finances relatively easier to handle in the future. Bankruptcy is daunting to anyone, which is why most individuals try to avoid filing for it if they can. With debt relief methods, an individual is most often able to rework their debt into a plan that is more manageable for them.
Different Types of Debt Relief
Debt relief can come in many forms. The type of relief that is best for you will largely depend on your unique circumstances and the amount of debt you owe. Some of the most common forms of debt relief used in California include the following.
Debt Consolidation Loans
A debt consolidation loan is commonly used by individuals who have accumulated large amounts of credit card debt. Debt consolidation works by having an individual take out a loan that is then used to pay off their debt that may be spread across multiple cards. However, this doesn’t simply erase a person’s debt. Instead, it makes keeping up with it much easier. By paying off your credit cards with the loan, you will only owe one amount to your lender instead of multiple amounts on different cards. Debt consolidation also offers considerably reduced interest rates, making paying off the loan a bit easier, too.
Debt settlement is a little more complex than other forms of debt relief and involves negotiating with your creditors to allow you to pay less than what you owe. If you want to try to use the debt settlement method, it’s recommended you save a good amount before going to your creditor to negotiate. After sending in an initial number, your lawyer and your creditor will negotiate until they can hopefully come to an agreement where you pay less than what is owed. This amount must be paid upfront, though.
Credit Counseling / Debt Management Programs
Credit counseling or debt management programs work by having a professional evaluate an individual’s unique situation and determine the best form of debt relief for them. These programs often offer courses for individuals to learn how to better manage money, while also helping them rework their finances to pay their bills on time. Ideally, an individual in debt makes one payment to their credit counselor who then disperses it to the different groups they owe. However, many people tend to avoid third-party groups that aren’t legal professionals, as they can make you pay more than you owe between services and debt.
How to Qualify for Debt Relief in California
Your eligibility for debt relief will depend on the kind of debt you owe and what method you are trying to use to minimize it. For example, with debt consolidation loans, you may still need to have decent credit to be eligible to take the loan out in the first place. With debt settlement, not all creditors allow negotiation. This means in some cases, debt settlement may not be an option for you, regardless of “eligibility.” If you are looking to figure out if you’re eligible for debt relief and what will work best for you, it’s in your best interest to contact the experienced debt attorneys at the Law Office of Christopher P. Walker to help you find a solution.
Q: How Much Does Debt Relief Cost?
A: Each form of debt relief can vary in its total cost for the person using it, depending on what method they used and how long they used it for. For example, taking out a debt consolidation loan can keep your expenses at roughly the same place because you’re just transferring your debt to one organized location. With credit counseling, though, sometimes third-party groups can end up costing you even more than your monthly payments were to begin with.
Q: Is Bankruptcy Different Than Debt Relief?
A: Bankruptcy is considered to be a separate legal process from debt relief. When an individual files for bankruptcy, they are stating they are not able to pay all of their debts and can be provided with some form of relief. It affects your credit and overall finances much more than debt relief.
Q: How Does Debt Relief Affect My Credit in CA?
A: Most forms of debt relief will show up on your credit report for an extended period of time. However, each method can affect your credit differently, depending on how much debt you were in and the steps you had to take to try to relieve it. Some people only see a decrease of a few points in their credit scores, while others have seen it drop by 100 points.
Q: What Kinds of Debt Qualify for Debt Relief?
A: Debt that qualifies for debt relief includes credit cards, department store cards, gas cards, and unsecured personal loans. Medical debt and school debt are not eligible, however.
Anaheim Debt Relief Assistance
At the Law Office of Christopher P. Walker, our team has spent years helping countless clients find solutions to their debt. We understand how overwhelming mounting debt can be, which is why we’re committed to working with you to find the best course of action for your situation. Whether you’re looking to learn more about your debt relief options in California or need immediate help now, don’t hesitate to contact our team today.