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 more expensive places to live, which is why many Californians struggle financially and need debt relief or financial assistance.
The average debt per California household is about $73,400, not including mortgages. The average personal income is $68,510, just shy of the nation’s average of $70,784. Along with this, the current poverty rate is 12.3%, nearly an entire percentage point higher than the national poverty rate.
If you’re a California resident seeking debt relief or other economic resources, here are your options.
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California debt statistics
Here are California’s most up-to-date debt statistics:
- Average household debt: $73,400
- Average student loan debt: $37,084
- Average credit score: 721
- Median mortgage payment: $2,282
- Bankruptcies: 7,496
- Personal income: $68,510
- Child poverty: 15.3%
- Unemployment: 4%
Debt collection laws in California
In California, third-party debt collectors must adhere to the Fair Debt Collection Practices Act (FDCPA), a federal law that regulates 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 who they are, and the debt owed on first contact
- 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 the 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.
Debt Relief Options for California Residents
The main 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 that can help you pay off debt. Once you’ve enrolled in a DMP, a credit counselor will represent you and work with your creditors to do things like 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, and more.
- Bankruptcy: Filing for bankruptcy could offer you 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 for you. They can also help you determine whether you qualify for a Chapter 7 or a Chapter 13 bankruptcy.
Learn more about Chapter 7 bankruptcy in California by watching this video:
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 a 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
- Are struggling 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
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
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).
Debt settlement can be risky. For example, if could result in late fees, damage your credit, or fail altogether. That’s why it’s important to consider your options and have an upfront discussion with a legitimate agency before committing to anything.
California debt settlement companies
Here are the top debt settlement companies in California:
- Persolve LLC.: 9301 Corbin Ave #1600 Northridge, CA 91324; (818) 534-3100
- Money Management International: 6080 Center Drive Suite 605 Los Angeles, CA 90045; (323) 618-6664
- Mediator Debt Solutions: 20700 Ventura Blvd, Woodland Hills, CA 91364; (877) 915-5446
- Consolidebt LLC.: 505 N Euclid St. #615 Anaheim, CA 92801; (888) 777-6525
- Century: 2000 Commerce Loop, Suite 2111 North Huntingdon, PA 15642; (888) 913-8784
Debt settlement attorneys
Looking for a debt settlement attorney in California? Here are some options:
- Fitzgerald & Campbell: 400 N Tustin Ave Suite 401, Santa Ana, CA 92705; (844) 431-3851
- Wadhwani & Shanfeld: 15233 Ventura Blvd Suite 1000, Sherman Oaks, CA 91403; (818) 839-2487
- Price Law Group: 6345 Balboa Blvd, Building 2 Suite 247, Encino, CA 91316; (866) 210-1722
- Fullman Firm: 2000 East 4th Street Suite 320, Santa Ana, CA 92705; (866) 388-2681
- 1st California Law Inc – Orange County Bankruptcy Attorney: 2090 N. Tustin Ave., Suite 240, Santa Ana, CA 92705; (714) 881-7300
- Cal West Law: 21800 Oxnard Street, Suite 720 Woodland Hills, CA 91367; (818) 446-1334
Debt resources for California residents facing hardship
California debt relief programs and resources can help with things like bill pay, childcare costs, healthcare, legal aid, and more. Some of these resources are state-specific, while others are federally funded.
In California, one of the biggest concerns for many residents is food and nutrition. 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. In fact, 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:
- Second Harvest Food Bank of Orange County: 8014 Marine Way, Irvine, CA 92618; (949) 653-2900
- Food Bank of El Dorado County: 4550 Business Dr. Cameron Park, CA 95682; (530) 621-9950
- San Diego Food Bank: 9850 Distribution Avenue San Diego, CA 92121-2320; (858) 527-1419
- Food Bank of Southern California: 1444 San Francisco Avenue Long Beach, CA 90813; (562) 435-3577
- Community Action of Napa Valley: 2521 Old Sonoma Rd. Napa, CA 94558; (707) 253-6100
- Food Share Inc. of Ventura County: 4156 Southbank Road, Oxnard, CA 93036; (805) 983-7100
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 continues to drop, the state’s job growth continues to rise. Currently, California ranks 10th in terms of 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.
The state is not a right-to-work state, however, 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 on the “Qualify” tab to see what the eligibility requirements are. 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 you have everything 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, though. The timeline may be longer if you don’t meet all the requirements or are missing information.
Every two weeks, you’ll need to certify for benefits to ensure you continue receiving payments. Benefits range from around $40 to $450 a week.
Recently, FEMA Administrator Pete Gaynor approved a FEMA grant for California under the Lost Wages Assistance program. This grant will provide an additional $300 a week to people who are unemployed due to COVID-19 and are currently receiving unemployment benefits.
Banking and taxes in California
California’s state income tax ranges from 1% to 12.3% and is based on the taxable income earned, as well as 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% 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:
- California Housing Finance Agency — CalHFA helps people apply for a home loan, while also offering programs to low-income residents
- CalVet Home Loans — CALVET works with veterans to help them secure an affordable home loan, while providing housing resources.
- HUD-approved housing counseling agencies — HUD helps people with things like mortgage delinquency, pre-purchase counseling, and workshops, as well as provides financial guides to homeownership.
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.
Payday lending status in California: Legal
In California, payday lending is legal, but lenders must still adhere to certain payday loan laws:
- Maximum loan amount: $300 includes taxes/fees
- Maximum Interest Rate (APR): 460% on a 14-day $100 loan
- Minimum loan term: N/A
- Maximum loan term: 31 days
Statute of limitations on debt in California
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
State of California hardship programs
California has many state-specific hardship programs for those who need financial assistance. These include:
- California Housing and rental help: Offered through the U.S. Department of Housing and Urban Development, this connects residents to different housing-related resources and programs, such as subsidized apartments.
- Department of Housing and Community Development: This website also connects individuals with different resources, from grants and funding to community development.
- Homeless Housing Assistance Program: The HUD Exchange has a directory that connects people with local agencies that can help people facing homelessness.
- Single Family Housing Repair and Grants Program: California’s pilot program is increasing the grant limits to $10k and loan limits to $40k.
- California Low Income Home Energy Assistance Program: The federally-funded LIHEAP program helps qualifying individuals pay for heating and cooling bills.
- C.A.R.E/FERA energy assistance programs: These programs help low-income households by offering discounts on their electric and gas bills.
- Energy Savings Assistance Program: Those who qualify under the CARE income limits may also receive additional services, including insulation in the attic, chalking, and energy-efficient refrigerators.
- Children’s Health Program (SCHIP): SCHIP offers low-cost health insurance to children and teens.
- WIC: Designed to help women, infants, and children, WIC provides nutritional information and access to healthy food, as well as connections to affordable healthcare. It also comes with a WIC card for food purchases.
- For Women and Girls Resource: This site connects Californians to various resources, such as the SAC on Sexual Assault Victims, College Student Right to Access Act, and the Future of Abortion Council.
- Organization for Refugees & Immigrants: The Refugee Programs Bureau offers refugees and immigrants settle in California.
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:
- San Francisco County Veterans Service Office: 2 Gough St., San Francisco, CA, 94102; (415) 934-4201
- Sacramento County Veterans Service Office: 3970 Research Drive, Sacramento, CA, 95838; (916) 874-6811
- Escondido Military & Veterans Resource Center: 649 W. Mission Ave, Escondido, CA, 92025; (760) 740-5572
- San Diego County Office of Military & Veterans Affairs: 5560 Overland Dr, Ste 310, San Diego, CA, 92123; (858) 694-3222
- Santa Cruz County Veterans Service Office: 842 Front St, Santa Cruz, CA, 95060; (831) 454-7276
- Los Angeles Regional Office: 11000 Wilshire Blvd. Los Angeles, CA 90024; (800) 827-1000
- North Orange County Vet Center: 12453 Lewis Street Suite 101 Garden Grove, CA 92840; (714) 776-0161
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.com — successfully helped 1.4 million veterans and military spouses find employment
- VeteranRecruiting.com — virtual 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 things like 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.
Most debts can be collected for up to four years in California. State tax debt can be collected for up to 20 years.
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.
If the debt was acquired during the marriage, it may be considered community debt. This means a court will split it evenly between both spouses, even if the debt was taken out under one person’s name. Debts incurred prior to the marriage typically belong to the person who incurred them.