DebtHammer's free guide to debt relief details several options for California residents, including hardship programs, consolidation and other financial resources.

Debt Relief in California

You may be one of the many Californians that qualify for debt relief. Find out today!

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With 39,237,836 people — or roughly 12% of the country’s population — California is the most populous state in the United States. California is also one of the most expensive places to live, which is why many Californians struggle financially and need debt relief or financial assistance.

The current poverty rate is 12.3%, nearly an entire percentage point higher than the national poverty rate. California has taken steps to address this issue by raising the minimum wage to $16 an hour as of January 1, 2024. Fast-food workers’ wages were increased to $20 an hour as of April 1, 2024, and healthcare facility employers will be required to pay a higher wage starting June 1.

Nonetheless, the wage hike is likely to provide instant debt relief. If you’re a California resident seeking debt relief or other economic resources, here are your options.

Are you eligible for debt relief?

If you’re a California resident, DebtHammer may be able to help.

California debt relief programs

The average household debt in California is $73,400. But residents of the Golden State have a number of options for relief. These include:

DebtHammer offers a debt relief program customized for California residents who need debt relief. All California residents are eligible for a free consultation.

During that consultation, we will review various options including debt consolidation loans and debt settlement. If you choose to enroll in one of our programs, we will even include legal help if complications arise. DebtHammer is unique because we work with people with payday loan debt. Payday loan debt totals are usually too low to meet the minimum requirements of most debt relief companies.

To enroll, all you need is either:

  • $7,500 in unsecured debt or
  • $1,000 in payday loan debt

READ MORE: How does it all work with DebtHammer?

More California Debt Relief Options

Want to check out some other options? A company doesn’t have to be based in California to offer debt relief. You can choose whichever company makes you feel comfortable.

California debt settlement companies

Here are the top debt settlement companies in California:

READ MORE: Debt settlement companies

Debt settlement attorneys

Looking for a debt settlement attorney in California? Here are some options:

READ MORE: Debt settlement attorneys: Do you need one?

Hardship programs

California debt relief programs and resources can help with bill pay, childcare costs, healthcare, legal aid, and more. Some of these resources are state-specific, while others are federally funded.

Food resources

In California, food and nutrition are the biggest concerns for many residents. Around 20% of California residents struggle with food insecurity. This can lead to long-term issues like physical or mental health problems.

Around one in 11 Californians also face hunger — one in eight are children. Fortunately, California has many food and nutrition programs. The California Department of Social Services website has a directory that connects residents with food banks throughout the state.

Some of these food banks include:

How to get relief in California

The primary forms of California debt relief are:

  • Debt consolidation loans: A debt consolidation loan combines several high-interest debts into a single loan with one monthly payment. This can make it easier to make monthly payments and help prevent late fees. If you have good credit, it could also save you hundreds or thousands of dollars in interest.
  • Debt Management Plan: Nonprofit credit counseling agencies offer DMPs to help you pay off debt. Once enrolled in a DMP, a credit counselor will represent you and work with your creditors to lower monthly payments, reduce interest rates, or waive late fees. Most DMPs take three to five years to complete.
  • Debt settlement: Debt settlement involves negotiating with your creditors to reduce how much you owe to a smaller amount. Most people go through debt settlement agencies to do this.
  • DIY plans: As a form of DIY debt settlement, this option is best for those with excellent negotiating skills. DIY plans could help lower your account balance, reduce interest rates, waive late fees, etc.
  • Bankruptcy: Filing for bankruptcy could offer a fresh start if you’re struggling with expensive debt and nothing else works. Consult a bankruptcy lawyer before filing, as they can advise you on whether this is the best option. They can also help you determine whether you qualify for a Chapter 7 or a Chapter 13 bankruptcy.

READ MORE: Debt settlement — how to get your debt under control now

Debt settlement in California

Debt settlement involves working with a professional debt settlement company to try to reduce how much you owe. When successful, you could reduce your debt by up to 50% (or more).

The process could be beneficial if you:

  • Can’t keep up with regular expenses or are drowning in debt
  • Have more than $7,500 in unsecured debt of $1,000 in payday loan debt
  • Struggle to make multiple monthly payments
  • Have turned to payday loans, credit cards, cash advance apps, and other expensive forms of credit to make ends meet

READ MORE: Debt settlement fees

A debt settlement plan could help you pay off:

  • Lines of credit
  • Personal loans
  • Department store cards
  • Student loans in default
  • Old judgments
  • Other unsecured consumer debts

READ MORE: Debt settlement qualifications

Typically, debt settlement takes two to four years to complete. During this time, you need to set aside a set amount of money in a secured account until the balance is high enough to repay a settled debt in full. The debt settlement agency may also recommend that you stop making payments on the accounts they’re trying to settle to increase the odds of success. You may also be unable to use your credit cards (except one for emergencies).

READ MORE: Debt settlement pros and cons

Pro tip: Debt settlement can be risky. For example, it could result in late fees, damage your credit, or fail altogether. That’s why it’s essential to consider your options and have an upfront discussion with a legitimate agency before committing to anything. But if your creditors agree to settle and you successfully complete the program, you could end up debt-free. The average debt settlement client saves 30% of their total enrolled debt after fees.

READ MORE: How will debt settlement impact your credit score?

California statutes of limitations

California’s statute of limitations on debt ranges from two to 20 years. Here are the main types of debt and their statutes of limitations:

  • Medical debt: 4 years
  • Credit card: 4 years
  • Auto loan debt: 4 Years
  • State tax debt: 20 years

California debt collection laws

In California, third-party debt collectors must adhere to the Fair Debt Collection Practices Act (FDCPA), a federal law regulating debt collection nationwide.

The FDCPA prohibits debt collectors from doing any of the following:

  • Attempting to collect on a debt that the individual doesn’t actually owe
  • Claiming to be a government or legal official
  • Using deceptive, abusive, or manipulative tactics to collect money
  • Contacting the debtor (person who owes the debt) at work or at home outside of business hours without prior consent
  • Harassing either the debtor or the debtor’s friends, family, colleagues, or supervisor
  • Threatening to take legal action against the debtor (unless the debt collector fully intends to take it)
  • Failing to identify on first contact who they are and the debt owed
  • Threatening jail time or wage garnishment without a court order

California also has its own debt collection laws that expand upon the FDCPA. Here’s what debt collectors can and cannot do under California law:

  • As of January 2022, debt collectors cannot engage in debt collection unless they obtain and maintain a valid license in the state.
  • Under the Rosenthal Fair Debt Collection Practices Act, the original creditor and third-party debt collectors must follow specific debt collection practices (similar to the FDCPA).

Further, California’s SB 908 Debt Collection Licensing Act (DCLA) states:

  • Debt collectors cannot make a phone call without identifying who they are and why they’re calling.
  • Debt collectors may not send written or digital communications that don’t clearly display the debt collector’s license number in 12-point type.
  • The Debt Collection Advisory Committee exists to help the commissioner handle various debt collection issues.

Within SB 908, a debt collector cannot:

  • Make repeated phone calls.
  • Require the debtor to pay for a long-distance charge.
  • Call without disclosing their identity.

For more information about debt collection in California, refer to the California Debt Collection Resource or the Department of Financial Protection and Innovation.

Payday lending status in California: Legal

In California, payday lending is legal, but lenders must still adhere to specific payday loan laws:

  • Maximum loan amount: $300 including taxes/fees
  • Maximum Interest Rate (APR): 460% on a 14-day $100 loan
  • Minimum loan term: N/A
  • Maximum loan term: 31 days

READ MORE: Ultimate guide to California payday loan laws

California debt statistics

Here are California’s most up-to-date debt statistics:

Income and employment in California

California’s unemployment rate was 16.1% during the height of the COVID-19 pandemic in 2020. It’s since dropped to 4% — a noticeable improvement, even though it’s still 0.5% higher than the national unemployment rate.

As the unemployment rate drops, the state’s job growth continues to rise. California ranks 10th in job creation with 850,600 new jobs over the past 12 months.

California is an employment-at-will state, which means an employer can fire an employer with or without reason. This can lead to issues with job security.

However, the state is not a right-to-work state, so employees may be required to join a union whether they want to or not. This can lead to increased job security in some cases.

How to apply for unemployment benefits in California

To apply for unemployment benefits in California, go to the Employment Development Department website. This website provides the information you need to begin the application process.

Once on the site, click the “Qualify” tab to see the eligibility requirements. Among other things, you’ll need to:

  • Be currently fully or partially unemployed (through no fault of your own)
  • Be physically capable of working
  • Have earned a certain amount of wages

If you believe you qualify, click “Register and Apply” to see what information you need. This includes:

  • Previous employer information (ex. reason you are no longer working, total gross earnings for the last week worked, last date worked)
  • Employment history
  • Identity documents — two primary documents or one primary and two secondary documents

Once everything is in order, create an online account on the EDD portal and start the application. If you need help, you can submit an online request.

It’s best to apply the first week that your hours are either reduced or you lose your job. Claims begin the Sunday of the week you apply. You’ll have to wait a week to receive your first benefits check. The timeline may be longer if you don’t meet all the requirements or are missing information.

Every two weeks, you must certify for benefits to ensure you continue receiving payments. Benefits range from around $40 to $450 a week.

Banking and taxes in California

California’s state income tax ranges from 1% to 12.3% and is based on the taxable income earned and filing status. Here’s what single taxpayers can expect:

  • $0 to $8,809 = 1.00% tax rate
  • $8,809 to $20,883 = 2.00% tax rate
  • $20,883 to $32,960 = 4.00% tax rate
  • $32,960 to $45,753 = 6.00% tax rate
  • $45,753 to $57,824 = 8.00% tax rate
  • $57,824 to $295,373 = 9.30% tax rate
  • $295,373 to $354,445 = 10.30% tax rate
  • $354,445 to $590,742 = 11.30% tax rate
  • $590,742 to $999,999 = 12.30% tax rate
  • $1 million+ = 13.30% tax rate

In 2021, around 5% of Californians were unbanked, meaning they had neither a checking nor a savings account.

California housing market

The average home value in California is $765,495, a 7.1% increase over the past year. In comparison, the United States’ average home value is $357,589. An estimated 55.8% of Californians are homeowners.

California residents may benefit from the California Homeowners assistance fund, which contains several state and regional programs for homeowners. The programs fall within the U.S. Department of Housing and Urban Development and include:

For more information or resources on finding affordable housing, head to the HUDHomes website.

The average Californian pays about $2,421 on their median mortgage payment. For a 1,020-square-foot apartment, they pay around $1,726 in rent.

Retirement in California

Californians have, on average, about $452,135 set aside for retirement. To comfortably retire, they should have closer to $1,391,547.

Average California insurance premiums

Homeowner insurance premiums cost about $1,084 per year for homes valued at $250,000. This amount is lower than the national average of $1,383.

The average car insurance premium is $2,190 for full coverage. This is several hundred dollars higher than the national average.

Help for Veterans

As of 2020, California has 1,642,998 Veterans. The California Department of Veteran Affairs offers economic support to Veterans facing homelessness, unemployment, and other hardships. There are also many unemployment resources available to Veterans.

Facilities in California

Here’s a list of some of the biggest VA facilities in California:

Employment resources for Veterans

Looking for employment resources in California? Here’s a list of Veterans’ job resources:

  • CareerOneStop — career resources, job advice, and a job search portal for Veterans
  • MilitaryHire.comsuccessfully helped 1.4 million Veterans and military spouses find employment
  • VeteranRecruiting.comvirtual career fairs and online job resources
  • Helmets to Hardhats — networking opportunity for Veterans and active military personnel transitioning into civilian life and the construction industry
  • Hiring Our Heroes — networking events, hiring opportunities, and more for Veterans and other service members
  • My Next Move — resources for Veterans looking for civilian jobs that use their military skills
  • Warriors to Work — connection for Veterans and potential employers

The bottom line

California has many forms of debt relief and economic aid available to those in need. This includes debt settlement, Debt Management Plans, and economic hardship programs. If you’re dealing with unmanageable debts, are looking for employment, or are being harassed by debt collectors, you have options.


How long can a debt be collected in California?

Most debts can be collected for up to four years in California. State tax debt can be collected for up to 20 years.

When does the statute of limitations begin in California?

It typically begins on either the date of your missed payment or on the date of your most recent payment. For credit cards, it may also begin on the date of your last transaction.

Am I responsible for my spouse’s debt if I get divorced in California?

If the debt was acquired during the marriage, it may be considered community debt. This means a court will split it evenly between spouses, even if the debt was taken out under one person’s name. Debts incurred before the marriage typically belong to the person who incurred them.

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