Primed For Debt Settlement
Despite loan forbearance from the federal CARES Act and a statewide eviction moratorium that aims to protect Californians, personal debt such as credit cards and medical bills have been largely overlooked by lawmakers, leaving consumers exposed to potential predatory practices by alternative financial services.
That is a huge bubble of people who are primed for debt settlement, Nguyen Orth said.
The debt settlement industry expects to do very well. In a February meeting of the Consumer Debt Relief Initiative, an Accenture market analysis said that the industry projects a 75% increase in the number of accounts enrolled in debt settlement services in 2021.
The new California Consumer Financial Protection Law, which took effect Jan. 1, gave the state Department of Financial Protection and Innovation new authority to regulate the industry. The agency says it wont start tracking debt settlement companies until 2023.
Banks And Bank Accounts
Opening a Bank or Credit Union account
Bank and credit union accounts can be great things. They allow you to avoid carrying large amounts of cash, make it easier for you to cash checks, and you can even arrange to have payments, like tax refunds and social security, made directly into your account. Click here to find out about different kinds of accounts and questions to ask before opening one.
Protecting Your Account
Your bank or credit union account has your money, and there are people out there who would love to get it. On this page we offer tips about protecting your account from these people and give you information on some of the popular scams they use to trick you out of your money.
Consolidation Scams Are Plentiful
Having a lot of debt is stressful. When researching consolidation companies, its crucial to take the time to find an organization thats reputable, has great customer reviews, and has a long history of helping consumers get out of debt.
Be wary of consolidation companies that are new to the marketplace, make big promises, or require a deposit or funding fee upfront. Before turning over personal information to any debt consolidation organization, check their BBB ratings and reviews. Look for online reviews from customers who have completed the debt consolidation process.
QUICK LINKS
Read Also: When To File Bankruptcy In Michigan
Is California Debt Relief A Real Thing
California debt relief is a real thing. It’s available through a number of different California Debt Relief programs, including the state’s Debt Relief Program and Mortgage Assistance Program. You can also get help from private debt relief companies.
The main thing to remember is that you should always research any company or program before you sign up. Make sure you understand the terms and conditions and be aware of any potential scams.
Pacific Debt has helped hundreds of California consumers reduce the amount they owe since 2002 and was rated the “Best Debt Settlement Company of 2020.” If you are living in the state of California, give us a call right away for a consultation so we can help you understand all your California debt relief options.
Read the Pacific Debt reviewsto see why we are rated above other debt settlement companies.
California Credit Counseling Or A Debt Management Program
Consumer credit counseling programs are only for credit card bills. Debt management programs reduce credit card interest rates, then consolidating payments. But DMP is not a loan.
Instead, you pay the DMP company every month, and they pay your creditors at a lower interest rate. As a result, monthly payments get reduced, and consumers get out of debt in around five years.
Golden Financial Services feels that if you can afford a DMP, youd be better off using the snowball method on your own.
You May Like: How To File For Bankruptcy In Nm
Understand How California Credit Card Settlement Programs Deal With A Summons:
Debt relief programs dont pay your creditors monthly.
So what will you do if a creditor issues you a lawsuit?
How will the company resolve it?
For those willing to stick with the program, California debt settlement can get you financial freedom more quickly and at a lesser cost than other forms of debt relief.
How Much Does It Cost
As a debt relief connection service, California Debt Relief charges no fees to connect you with a company that may be able to help. Your ultimate costs depend on the debt relief provider you’re matched with and the program you sign up for.
However, in the fine print on California Debt Relief’s website, it mentions that some debt consolidation companies may charge a one-time enrollment fee between $25 and $75. You may also be on the hook for a monthly program administration fee that can vary from $5 to $75 depending on the number of creditors you owe.
Read Also: Hud Homes For Sale Oregon
New Developments In La Mayoral Campaign
On Friday night, someone broke into the home of Rep. Karen Bass, the frontrunner in the Los Angeles mayoral race, and reportedly took two guns.
- Bass, in a statement she issued the following day: It appears that only two firearms, despite being safely and securely stored, were stolen. Cash, electronics and other valuables were not.
Crime and disorder has dominated the debate in the eye-poppingly expensive Los Angeles mayoral campaign, but until now its remained a more abstract point for the candidates. Bass opponent, real estate developer Rick Caruso, has run as a no-nonsense businessman who wont let progressive ideology get in the way of cracking down on crime.
If elected, Bass would become the first woman to serve as mayor of Los Angeles. She beat Caruso in the primary by seven-points, despite Caruso spending more than $30 million.
The break-in didnt seem to interrupt Bass weekend campaign plans she visited Democratic activists in the Valley and San Pedro on Saturday. But the news does round out a terrible, horrible, no good, very bad week for Bass.
On Wednesday, the Los Angeles Times reported that details about the tuition-free masters degree Bass received from the University of Southern California are now playing a critical role in a federal fraud bribery case against former L.A. County Supervisor Mark Ridley-Thomas and one of the universitys former deans.
Stay Informed With Our Free Newsletter That Helps You Hold Your Leaders Accountable
Why would any state take away debt settlement as an option to these families during this pandemic?
Willie Brown, Former San Francisco Mayor, in Industry Video
As part of the enrollment process, Gomez provided her income, expenses, and debts to establish a monthly budget. But she said she was left with the impression she could afford to pay a monthly $250 deposit into her settlement fund when she really couldnt.
The ClearOne Advantage representative also told her that they could not help her if she was not enrolling at least $10,000 in debt, she said prompting her to enroll a credit card on which she had been making regular payments so she could participate in the program.
The agreement Gomez signed, which CalMatters reviewed, has no mention of minimum requirements to enroll in the program, but does charge a fee assessed at 25% of the total debt. That means the company ultimately plans to charge her just over $2,500. As of June 2021, Gomez deposited $2,259 into her settlement fund, of which $1,053 has been debited as service and transaction fees.
It wasnt until Gomez was sued by Bank of America, she said, that she learned she had defaulted on all her credit cards and she was now facing a court judgement.
If I had known since day one that I could have been sued, I think right there, I would have stopped and I would have tried to get more research to try to understand what was the point of paying , Gomez said.
Also Check: City Of Jacksonville Foreclosure Listings
More Debt Statistics In California
The total mortgage debt of Californians was $143.15 billion in 2020 and was projected to hit $172.9 billion by 2026. The surge in interest rates in 2022 might curtail the growth.
- Student Loan Debt: Californians owe more in student loans than residents of all other states, but thats simply due to its large population. The total is $141.8 billion, but the average debt of $37,804 ranks 13th in the U.S.
- State Debt: The Golden State is in the red. Californias total liabilities are $362.87 billion, which ranks No. 5 in the U.S. To pay that off, each resident, including children, would get a bill for $33,000.
- Identity Theft: California had 133,119 reported cases of identity theft in 2021. That worked out to 333 reports for per 100,000 residents, which ranked No. 19 in the U.S.
- : California residents carried an average of 5.9 credit cards with average debt of $6,729 in 2021, a 31% increase from 2020. Lending Tree ranked that 14th in the nation and $160 higher than the national average.
- Debt Collection: The states Debt Collection Licensing Act took effect Dec. 31, 2021. It mandates that debt collection agencies and collectors must apply for licenses to operate in the state. That gives the state a way to monitor and track unscrupulous collectors.
- The average Californians score is 721, which is slightly higher than the national average of 716.
More On Californias Economy
California, with 39.6 million residents in 2022, is the nations most populous state. In many respects. It functions like a nation within a nation, offering a wide array of social services that many other states lack. If you live in the Golden State and are having money troubles, California has an array of debt-relief resources to help rehabilitate your finances.
Theres a lot of wealth, but it is concentrated in a few areas. Californias gross domestic product was $3.36 trillion in 2021, which would be the worlds fifth-largest economy if California were a nation.
The economy is based on technology, agriculture, business services and manufacturing. Four of the worlds 10 largest companies are headquartered in California, including Apple, Meta , Visa and Alphabet Inc., the parent company of Google.
After the COVID pandemic saw Californias GDP shrink by 2.8% in 2020, the state bounced back and saw a 7.8% increase in 2021, third best among the states.
On the downside, thousands of businesses have left for states with lower taxes and less regulation. California lost 117,552 residents in 2021 after having lost 182,083 residents the year before. Californias top state income tax of 13.3% is the nations third highest behind New York and Oregon.
Read Also: Does Bankruptcy Cover Private Student Loans
Debt Relief Programs In California
California led the nation in Chapter 7 bankruptcy filings in the first quarter of 2022, so there are a lot of people there who could use help dealing with their debt.
Relief is available from banks, , online lenders and debt-relief companies that are both nonprofit and for profit. All have specialists who can help solve financial dilemmas, especially
Five programs specifically address debt concerns: debt management, debt consolidation loans, debt settlement, nonprofit debt settlement and bankruptcy.
California Housing Assistance Programs
Californians have access to federally funded Section 8 housing assistance. Eligibility is largely based on income minimums, which vary from place to place around the state. Both single people and families can apply, though income criteria vary according to family size.
The program, a function of the federal Housing and Urban Development, provides rent subsidies for very low-income families. After applying for a rent voucher grant, applicants can be required to undergo background checks and may be placed on waiting lists, since funding often outstrips demand.
In addition to income verification, you need to provide past housing information and information on any court-ordered payments youre making.
Local public housing authorities around the state also provide housing assistance, guidance and help in applying for Section 8 vouchers. Contact information is available online at their website.
California also operates homelessness prevention programs and rehousing services. It offers aid to prevent evictions, helps locate transitional housing, offers one-time rent help and offers funds to pay security deposits.
Rental assistance in California includes COVID-19 rent relief, subsidized apartments, eviction protection and homeowner assistance.
Homelessness Prevention in California
Don’t Miss: How Long Does Filing Bankruptcies Take
Debt Consolidation Loans For California Residents
A debt consolidation loan is a single loan that is used to pay off credit card debt for multiple cards. For example, if you owe a total of $10,000 on four credit cards, you take out a $10,000 debt consolidation loan and pay off the four credit cards. You still owe $10,000, but its to one source at a considerable reduced interest rate. Most banks, credit unions and online lenders offer debt consolidation loans, provided you meet the credit score standards.
What Are California Debt Management Programs
A debt management plan is offered by nonprofit credit counseling agencies, who analyze your income and expenses to create a budget that includes a fixed monthly payment that allows you to pay off your high-interest debt in 3-5 years. A big plus is that you accomplish this without taking out a bank loan.
The credit counseling agency works with your creditors to reduce the interest rate on what you owe to a manageable level. How important is that? The average interest rate on credit cards is 16.7% , but if a consumer misses a payment, the rate can jump to 20%-25%. Miss two payments and the rate can go to 25%-30%.
If you owe $5,000 on credit cards and reduce the interest rate from 25% to 8%, the interest payment falls from $105 a month to $33. Thats $72 a month you can apply to your balance to pay off the debt faster. Counselors at nonprofit credit counseling agencies figure out what your monthly payment would be to eliminate your credit card debt.
You May Like: How To View Bankruptcy Records Online
Should I Settle And Pay The Debt
Would you plead guilty and pay a speeding ticket if you knew it was inaccurate?
Consider if you get a speeding ticket that says you were going seventy on a road with a sixty-mile-per-hour speed limit.
You know for a fact that you were going closer to sixty-five miles per hour.
Do you plead guilty and pay the ticket, resulting in a flawed drivers license record and higher insurance rates?
No, your better route would be to dispute the ticket.
If dismissed, you no longer have to pay it, and nothing negative goes on your record. Even though you were speeding, the officer couldnt prove that the speed limit he alleged you were driving at was accurate.
Similarly, with debt, after accounts are sold to a collection agency, unauthorized fees are added in, information turns inaccurate, and paperwork gets lost. Consequently, debt validation forces the collection agency to prove that the amount they claim you owe is valid. Collection agencies must also prove they are legally authorized to collect on a debt.
Debt collection companies often buy debt, knowing paperwork is missing and information may not be accurate. So its a numbers game to debt collection companies. But youre smarter than that. Now you know.
Other Things Worth Your Time
Tidal marsh or fake habitat? California project draws criticism // Los Angeles Times
Kevin McCarthys fraught path to power // Wall Street Journal
California math students are struggling. Will reforms make the problem worse? // New Yorker
Suspect arrested in murder of 8-year-old Hayward girl Sophia Mason // KRON4
Workers are Americas busiest port are fighting the robots // LAist
The nerve center of the American right is a California think-tank // New York Times Magazine
Anti-tax Dem running for Congress voted for at least 38 tax hikes // Fox News
Navy orders high-level outside investigation of SEAL course // San Diego Union-Tribune
California could give more than a million people with criminal records a fresh start // Vox
Fire destroys a humble giant of L.A. churches // Los Angeles Times
Read Also: What Happens When You Declare Personal Bankruptcy
Mortgage Debt Forgiveness Taxable For Ca Purposes
To answer that question, you must:
Determine if tax years 2014 and later are forgivable| If | Then |
|---|---|
| The cancellation of debt originates from nonrecourse or recourse debt forgiveness. | Generally speaking, nonrecourse debt forgiveness does not result in a tax liability from Cancellation of Debt Income . However, a portion of recourse debt forgiven in 2014 may result in CODI, and therefore may be taxable. |
| The debt is recourse do any exceptions or exclusions apply? | There are two common conditions that allow a taxpayer to exclude CODI from their taxable income.
For more information about these and other exclusions, please see IRS Publication 4681. That publication also contains a worksheet to help calculate the extent to which a taxpayer is insolvent immediately before the debt cancellation. |
Franchise Tax Board’s Conformity To The Irs
As of October 16, 2015:
California law remains out of conformity with the federal statutory exclusion for certain discharges of qualified principal residence indebtedness for discharges of indebtedness occurring on or after January 1, 2014.
Understanding FTB’s conformity position| Then | ||
|---|---|---|
| Federal | A discharge of qualified principal resident indebtedness occurred on or after January 1, 2014, and before January 1, 2015. | The mortgage debt forgiveness was extended an additional year to provide relief to qualified taxpayers. |
| California | Any discharge of qualified principal resident indebtedness income from a discharge of qualified principal resident indebtedness that occurred on or after January 1, 2014, and before January 1, 2015, which is excluded for federal purposes. | The debt may be required to be included in the taxpayer’s California income. |
You May Like: How Does Bankruptcy Work For Creditors
