For many in California, financial strain in recent years has led to difficulties in making ends meet. Some have had to rely on credit cards to purchase necessities such as groceries and utility bills. For many, this has led to a spiraling debt scenario from which it is difficult to emerge. While financial trouble can be very stressful, it is important to remember that California consumers have choices for debt relief.

One option is an aggressive attempt at debt settlement. This involves negotiating the terms of existing debt to allow for that obligation to be discharged for one lump payment that is lower than the total owed. In some cases, lenders will agree to accept a reduced amount versus having to pursue a borrower through collections or legal action. It is essential that the borrower get the full terms in writing before making any debt settlement payment.

Another option lies in filing for Chapter 13 bankruptcy. This form of bankruptcy allows borrowers to retain their home and other assets while repaying debts through a payment plan. The repayment structure is approved by the court. This is a good option for individuals who have experienced a temporary financial setback but who feel confident that they can repay their debts given a longer timeline.

Chapter 7 bankruptcy offers yet another debt relief solution. Often referred to as a liquidation bankruptcy, Chapter 7 allows a debtor to sell off certain assets to repay creditors. It also can lead to the discharge of many forms of consumer debt such as old credit card or medical bills. Chapter 7 is often seen as the fastest path to permanent debt relief.

When considering one’s options, it is important to research the pros and cons of each choice before deciding on a solution. While financial turmoil is certainly unsettling, there are ways of emerging from beneath a mountain of debt with a chance to start anew. These and other choices for debt relief can give hope to beleaguered California borrowers when it is needed most.

Source: Fox Business, “Choices for Debt Relief,” Fred O. Williams, Feb. 8, 2013