California Debt in California
People find themselves trapped into personal debt for all sorts of reasons – in many cases no fault of their own. Factors such as super high interest rates it’s no wonder why consumers feel overwhelmed with the amounts they owe.
Biggest reasons Californian residents are seeking debt settlement.
- Credit cards with 25-35% interest rates
- Private loans
- Divorce or separation
- Medical and hospital bills
- Income loss (especially due to COVID-19)
- Medical issues causing work loss
- Family expenses – birth, death, rehab, etc.
California is undoubtably one of the worst states to be in debt. The cost-of-living is estimated to be 33% higher than the national average, and typical rent prices are even higher than that.
Additionally, California has an 11-percent unemployment rate – the 3rd highest U.S. state in 2020; beaten only by Hawaii and Nevada. [1]
The upside for those living California are the many consumer debt protection laws and regulations. They’re an expansions on federal laws and are more advantageous for California residents with insurmountable debt. For example, one law outlines exactly when you can refuse to pay off a credit card bill.
If you’re overburdened by debt there’s a few options available.
- Debt consolidation plans
- Credit counseling
- Bankruptcy (last-resort option)
Credit Card Debt Settlement
When it comes to credit card debt, people in California are slightly above average vs. other U.S. states. In 2019 the average Californian carried $6,200 in credit card debt (with the nationwide average of $6,200). [2]
| U.S. State | 2018 | 2019 |
|---|---|---|
| Alabama | $5,557 | $5,672 |
| Alaska | $7,974 | $8,026 |
| Arizona | $5,909 | $6,053 |
| Arkansas | $5,298 | $5,327 |
| California | $5,998 | $6,222 |
As expected, major cities like San Diego and San Francisco had higher vs. average credit card debt, but Napa had the highest debt among California cities.
Credit card debt in major cities
- San Francisco: $6,659
- San Diego: $6,825
- Oxnard: $6,588
- Napa: $7,240
- Vallejo-Fairfield: $6,584
California Debt Settlement
In addition to credit card debt, California residents predictably also have significant amounts of student loan debt, home mortgage, and car loan debt.
Below is the breakdown for each type of debt and how it stacks up vs. debt in other U.S. states in 2019.
Student Loan Debt
As college tuition continues to rise, young people are finding themselves trapped in hundreds of thousands of dollars in debt. In many cases students graduate with over $100,000 owed.
In 2019 the average student loan debt was $35,000. Students in California were right at the average mark at $35,000 – Washington D.C. had the highest average student debt at $52,500. [3]
| U.S. State | 2018 | 2019 |
|---|---|---|
| Alabama | $33,742 | $35,674 |
| Alaska | $30,085 | $32,096 |
| Arizona | $32,705 | $34,740 |
| Arkansas | $30,345 | $32,203 |
| California | $35,238 | $37,468 |
When you compare it to the rest of the country, California’s graduates tend to pay down their loans slower, but they have also proven to be more responsible with their debt in the last 10-years.
In general, California college students consistently make their monthly student loan payments and have fewer delinquencies vs. student debt in other states.
What to look for in debt settlement companies:
- Experience with negotiating with credit card companies
- Debt industry associations and certifications
- Affordable service - fees should be a percentage of what the debt company will help you save.
- Read online reviews before retaining their services.
Mortgage Debt Settlement in California
According to an Experian report in 2019, the average Californian owed $363,500 in mortgage debt, the 2nd highest in the country – the avg. mortgage debt in the U.S. was $200,000 . The highest mortgage debt goes to Washington D.C. residents which have, on average, $418,500 in debt. [4]
| U.S. State | 2018 | 2019 |
|---|---|---|
| Alabama | $137,854 | $140,659 |
| Alaska | $221,505 | $223,430 |
| Arizona | $199,421 | $202,148 |
| Arkansas | $126,218 | $128,842 |
| California | $356,892 | $363,537 |
The good news is that even though California is the highest, it also has one of the highest average home values. The data is also skewed because large cities such as Los Angeles and San Francisco have average home values well over $1-million.
In a way the average for the entire state is a bit biased because nearly 30% of California residents live in expensive, major cities.
California Statute of Limitations
California actually has an advantageous statute of limitations for people and businesses that are unable to pay off their debt. For all unsecured debts (i.e. credit card debt), the California statute of limitations is 4 years (for most debt) – excludes those made with an oral contract.[5]
Oral statute of limitations in California is 2 years.
Today’s post is a sponsored guest article from 1855jetdebt.com.