Whether you are a native islander or you have relocated to Hawaii to enjoy all that the area offers, you may enjoy leading a productive life in one of the most beautiful states in the U.S. Many have adopted the carefree lifestyle that Hawaii is known for, but others have considerable financial stress and find it difficult to relax as a result. While some simply live with a tight budget, others face dire financial circumstances. If you are unable to make your minimum monthly debt payments and are wondering how you will make ends meet, you understandably need to seek debt relief as soon as possible. One option that works well for many in your situation is debt settlement. By learning more about debt settlement, you can better determine if this is the type of debt relief you want to pursue.
The Typical Personal Budget in Hawaii
Because many of Hawaii’s goods must be imported from the mainland, the islands have an understandably high cost of living. However, many local residents have a modest income, and this can create a situation where you must live on a tight budget. When you add high debt payments to the mix, you may be stressed financially. The U.S. Census Bureau reports that approximately 11 percent of the state’s population is in poverty. The per capita income in Hawaii is $29,822, and this means that many residents have only a modest income to pay their bills with. Housing is often one of the most expensive costs associated with life in Hawaii. The average homeowner has a monthly mortgage payment of $2,270, and the average person who rents a home in Hawaii pays $1,438 per month for rent. The combination of high expenses and a low income means that many residents live with a tight budget, and debt payments can stress your budget. Through debt settlement, you may be able to eliminate some of the debt you currently owe.
What Is Debt Settlement?
If you are not familiar with what debt settlement is and how it works, you are not alone. Learning more about this process can tell you if this is the right form of debt relief for you to seek. Debt settlement means that you negotiate with each of your creditors individually, requesting that they reduce the amount of debt that you owe to them. This has two key results. First, it creates lower monthly debt payments that may be more manageable for you to make each month. Second, it lowers your total debt balance so that you can more quickly pay the balance off. Creditors, however, are not required to agree to settlement, and some will not. Those who do agree may write off hundreds of dollars of debt or more per account. As you can see, when this process is successful, it may re-position your finances so that they are easier to manage.
How Debt Settlement Can Benefit You
Debt settlement has both benefits and drawbacks, and it is not ideal for everyone with credit card debt. Note that settlement means that you are not paying your creditors back the full amount you borrowed. Because of this, a negative rating will show on your credit report, and your credit scores may be dinged for several years or longer as a result. With this in mind, those who currently have good credit scores may seek consolidation as a method of debt relief before seeking settlement. This is because debt consolidation will not damage your credit rating. While settlement does have its drawbacks, it also can provide you with the immediate financial relief you need without filing for bankruptcy. It generally is best suited for those who cannot make minimum debt payments currently.
The Types of Debts That Can Be Settled
Now that you are aware of the pros and cons associated with debt settlement, you need to learn which types of debts can be settled. This factor is instrumental in your decision about whether to proceed with settlement or not. Government-backed debt, such as some student loans, cannot be negotiated. In addition, secured debts, such as a home mortgage or a car loan, may not be negotiated and settled. On the other hand, unsecured debt to a private bank or lender can be settled. This most commonly includes credit card debt. However, some student loans that are issued by a private bank may also be included in this.
If you believe that debt settlement may be an effective form of debt relief for you to use, it is wise to seek guidance from a debt counselor. The counselor may help you to determine if this is the best method of debt relief for you, and some will actively assist with the negotiation and settlement process.