Best Debt Consolidation in Bakersfield, CA

How to choose debt consolidation in Bakersfield

The median income in Bakersfield is lower than both the U.S. and California, and the state ranks fourth in the nation for highest credit card debt. The average household in Bakersfield holds $7,899 in credit card debt. Many residents are facing even higher amounts plus medical bills or other debt and are dealing with the constant stress of collection calls and letters from creditors.

There are several ways to start clearing your debt and reducing that stress, including debt consolidation, which refers to a range of services available to consumers. Consumers can learn about options for dealing with debt at usa.gov/debt.

Many companies that offer debt consolidation focus on debt settlement. Also called debt arbitration, debt negotiation or credit negotiation, debt settlement is a specific process. During debt settlement, you make monthly payments into an account set up specifically for debt settlement. The debt consolidation company will then use the funds in this account to settle your debts, sometimes for a lower amount than you owe.

Debt settlement is an option for unsecured loans only. Secured loans, which use require collateral as part of the loan, are not eligible for debt settlement.

• Secured debt: mortgages, auto loans, personal loans that use collateral
• Unsecured debt: credit cards, medical bills, payday loans

Debt consolidation companies prefer a minimum amount of unsecured debt, usually around $10,000, to provide settlement services. Expect the debt settlement process to take two to four years. While the debt settlement may lower your credit score initially, it does less harm than bankruptcy.

If your debt is less than what debt consolidation companies will work with, consider other options. You might qualify for a credit card that offers a zero percent introductory balance transfer or a personal debt consolidation loan from a bank. Debt consolidation loans will pay off your owed debts and allow you to make payments into one loan. Unlike debt settlement, these loans will not lower the amount of your debt.

You can also seek debt counseling services. The Federal Trade Commission offers guidance on how to choose a credit counselor, and California-based nonprofit BALANCE provides debt counseling in Bakersfield.