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Idaho is well-known for its incredible scenic beauty and friendly hospitality, and it also has great job opportunities and a fabulous economy for its residents to enjoy. As a resident of Idaho yourself, you may thoroughly enjoy life in this area on many levels. However, if you are like many residents, you may also be dealing with high credit card balances. While some are able to muddle through and make minimum monthly debt payments each month, others are falling behind on their payments. Some may even be getting calls or letters from debt collectors who are ready to take action against them. If you can relate to this type of financial situation, you may understandably be looking for an effective form of debt relief. One option that many others have used successfully is to proceed with debt settlement. After learning more about what settlement entails, you can decide if this is the right option for you.

What the Typical Personal Budget is Like in Idaho

If you are living with a tight budget in Idaho, rest assured that you are in good company. While the state is home to many wealthy individuals who are financially secure and who have minimal or no credit card debt, this is not the financial experience for the state’s average resident. The U.S. Census Bureau reports that more than 15 percent of Idahoans live in poverty. Furthermore, the average per capita income per year in Idaho is $23,399. This means that the typical resident has minimal income to pay bills with each month. Housing payments often take up a large chunk of personal income each month. The average homeowner in Idaho has a monthly mortgage payment of $1,189. Renters only have slightly reduced housing costs, and the average rent is $789 per month. After paying for utilities, car payments, insurance, food, gas and more, it is understandable why some people have no money left over to make credit card and debt payments.

How Debt Settlement Can Help

Living with the heavy burden of high debt balances and minimum payments that you cannot afford to make can be stressful, but rest assured that help may be available to you through debt settlement. Debt settlement begins with active negotiations between you and your creditors. Some individuals will negotiate on their own, but others will hire a professional negotiator to assist with this process. You will ask your creditors to reduce the amount you owe to them and to structure more affordable payments. If they agree, you will enjoy immediate relief in your monthly payments as well as in your total debt balance. Creditors, however, are not required to agree to settlement, and this is why professional negotiation services may be best if you plan to proceed with debt settlement.

Who Should Proceed with Debt Settlement?

When your creditors agree to settle your debt, they are agreeing to accept less than the full amount you owe. While this is legal, it also can damage your credit rating for many years. Because of this, debt consolidation should be considered as a first method of debt relief. Debt consolidation may provide the relief you need without damaging your credit scores. If your scores are already damaged or if you do not qualify for consolidation, settlement is a great second option to consider. It often is considered before bankruptcy. Typically, settlement is used by those who are heavily in debt and who already have a lower credit rating.

Which Debts Can You Settle?

Debt settlement is not effective with all types of debts. Typically, only creditors who may risk not obtaining any funds from you if you file for bankruptcy are interested in settling. Secured loans, such as a car loan or a residential mortgage, are not included in settlement. This is because the asset can be seized and sold to pay back the full debt if you default on payments. In addition, government-backed loans, such as most student loans, are not included in settlement. Some student loans, however, are made by private banks, and these may be included in settlement. Before you proceed with debt settlement, review your debts carefully to determine which ones may be settled.

Debt settlement is a serious step to take to deal with a tough financial situation. Because it can damage your credit rating, you should carefully weigh pros and cons before deciding to proceed with this option. In addition, keep in mind that settlement is not always agreed to. Even when it is agreed to, the creditor may not agree to a large enough settlement to benefit you. Some who proceed with debt settlement end up filing for bankruptcy anyway. You can speak with a debt counselor for further assistance in determining your best option for dealing with your debt situation.