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Debt Reduction

California Debt Reduction

Obtaining fast reduction in debt is a major topic for the California consumer. Many Americans are burdened with credit card debt, mortgage debt, student loans, medical bills, auto loans, and other various debts that keep them from living full lives. Here are the top ways to get out of debt.

Pay Off In Full

There are many different options available that all fall under the umbrella of paying off debt for the full balance owed. Some consumers will make a plan to pay off the highest interest rate credit cards first, or perhaps pay off the smaller balances first and then move on to the high balances. Other consumers will consider California debt consolidation, which is taking out a large loan that pays off all the various smaller debts leaving the consumer with a larger loan that must be paid off in full. Some consumers will ask their creditors for lower interest rates, or lower monthly payments. This usually results in extending the repayment term. In summation, some of these methods may be good options for certain consumers but in general are long repayment obligations that amount to repaying 100% of the balances owed plus interest.

Debt Settlement

Debt settlement is a negotiation with a creditor for a reduced balance payoff as a settlement of the debt in full. This means instead of paying back a creditor 100% of the balance owed a consumer pays back 30%, and the creditor forgives the remaining 70% that was owed. Creditors do this for various reasons but the largest of which is to help out consumers facing hardships in their life. By settling, the creditor recovers some of the debt instead of nothing from a consumer that simply cannot afford to repay their debts. Debt settlement should always be performed by a qualified lawyer because California debt settlement is a legal process requiring that expertise. Debt settlement is characteristically faster than repayment in full plans because much less money is owed.

Bankruptcy

Bankruptcy is the most severe debt elimination option. It is regulated by federal law and only reserved for those consumers who can qualify based on various factors including earnings, assets, and types of debt. For instance, private student loan debt is never eligible for bankruptcy while it is eligible for debt settlement. All bankruptcies start with a consultation with a California bankruptcy attorney to determine eligibility. Even if eligible, some consumers may choose not to go bankrupt because they do not have a high enough debt burden, or they simply want to avoid bankruptcy until absolutely necessary.