California is known for being the home of extravagant living. It is the most populous state in the nation and has the largest gross state product, which was $1.96 trillion in 2011. The household income in this state varies widely, thanks to the fact that impoverished and millionaires both live here.
In 2010, there were over 663,000 millionaires living here, which is the highest in the U.S. This state is truly one of the most diverse when it comes to culture, economy and lifestyle. The average household credit card debt in the state is $6,434, as of 2011, rising from its last record of $4,777.
California Debt Relief
Although California has many rich people living here, there are many blue collar and white collar individuals who are suffering from debt. It’s not always about how much money you earn, but how much money you spend. When you aren’t careful with your finances, you can easily find yourself in a woeful debt situation that is difficult to pay off. This is where the following debt relief options come into the picture:
- Debt consolidation: When a debtor has a lot of debt, this service can be used to get rid of them all, using a debt consolidation loan. This way, only one debt is owed. It helps to raise your credit score and clear up your credit report.
- Debt management: Some people need a little help with paying off and keeping track of their debts. A debt manager can help with this task. All of the debts you owe are negotiated into lower payments or balances and are paid off by the debt manager, using the debtors account.
- Debt settlement: Paying off debts one by one is an option when a debt settlement agent is used to negotiate a smaller, more affordable lump sum payment. Slowly, but surely debts are paid off until you’re debt free.
- Bankruptcy: Filing for bankruptcy should always be a last resort, when all else fails. A lawyer can be used to assist with this type of matter.
Debt Collections Laws in California
Californians are protected under the Fair Debt Collection Practices Act, which regulates how collection agencies and law firms are able to collect debts owed. All provisions of this Act must be followed. For instance, the max interest rate that a collection agency is able to charge is 10%. There is a California wage protection, which covers 75% of wages.
There is also a statute of limitations for the length of time that debts can be pursued after the debtor has become delinquent. Californians become delinquent on a payment from the date after their past due point, not from the last payment made. This is how it’s been set up:
- Two years max for oral agreements
- Four years max for written contracts
- Four years max for promissory notes
- Four years max for open accounts (i.e. credit cards)
If the debtor took out a loan from another state, then that state’s statute of limitations is to be used.