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Illinois has one of the most thriving economies in the United States. With the fifth largest gross state product of any U.S. state, it leads the way in the Midwest for industries ranging from finance, insurance and real estate to manufacturing and steel production.

Unlike many of the hardest hit areas throughout the Midwest’s rust belt, Illinois has retained a strong, vibrant manufacturing center. Producing hundreds of billions of dollars annually in value added products, it has the fourth highest number of blue collar manufacturing jobs of any state in the country.

Unlike many of the most advanced state economies, Illinois also has a thriving trade in the extraction of raw minerals, chief among them, coal. Illinois’ great deposits of the combustible rock also helped it develop into one of the nation’s leading producers of steel in the 19th and 20th centuries, a title which it still holds today.

What’s more, Illinois currently leads the way among all states in the development of clean energies. The Illinois legislature has passed a resolution that stipulates, by 2025, the state will derive at least 25% of its energy from renewable power, mostly wind.

The state has a relatively low but not great unemployment rate, which has been hovering around 6%. It also has relatively favorable bankruptcy laws but nothing sufficiently enticing for debtors to declare Chapter 7 in droves.

Yet Illinois still has the fourth highest bankruptcy rate of any state. This can partially be explained by the high cost of living. Illinois’ population is largely concentrated in urban areas. Places like Chicago feature some of the highest living expenses anywhere in the United States. But perhaps more convincing is the fact that Illinois is still among the Midwestern states that have collectively suffered greatly since the Great Recession of 2008-2010. Its nominal unemployment rate of just 6% belies a labor force non-participation rate much higher. And, like many other states with very high bankruptcy rates, it features a large underclass, comprised of minorities and illegal aliens who are often times not willing or able to participate in the official economy. Also, despite its relatively strong manufacturing base, Illinois’ reserves of high-paying blue collar jobs has diminished considerably since the 1980s, replaced with low-paying, low-hour service jobs. All this conspires to push many of the state’s residents into financial distress.

For Illinois residents who are facing a financial crisis, bankruptcy is not the only option. For some, debt settlement may be able to accomplish most of the same things as a bankruptcy but without all the collateral damage.

Who can debt settlement work for?

Debt settlement can serve as an intermediate tool between the fine surgical scalpel of debt consolidation and the sledgehammer of Chapter 7. Debt consolidation has gotten a bad rap over the years due to aggressive marketing tactics and settlement companies who didn’t truly have their customers’ best interests in mind. However, there’s no question that debt settlement can be exactly the right tool for the task some people have of getting permanently rid of their debts.

Generally speaking, debt consolidation is best used by those people who have large private, unsecured debts and who still have reasonable amounts of income but whose debts are too large relative to that income to allow for a debt consolidation deal to get rid of the debt within three to five years. While that may sound like a mouthful, it’s very important to understand when debt settlement is appropriate and when it isn’t.

Debt consolidation is best used for those who still have a great deal of income. This is because debt consolidation trades unsecured debt for secured debt, in exchange for reduced interest, payments and sometimes modest reductions in principal. Debt consolidation is usually not associated with any negative marks on the debtor’s credit report or any other adverse outcomes, such as potential lawsuits.

Debt settlement is a cruder tool. With debt settlement, payments to the creditor are simply halted. The goal of debt settlement is to significantly reduce the principal amount owed. This is all but guaranteed to hit the debtor’s credit score hard, reducing it by as much as 150 points. It will also put non-payment notes on their credit history. But because debt settlement involves cessation of payments to the creditor, it also risks lawsuits being filed prior to the debt being settled. This is a serious risk, as default judgments can include garnishment orders, attachments and liens. An unknown or forgotten about garnishment order can be devastating, as it can lead to missed rent payments or inability to buy food when an entire bank account or paycheck is wiped out.

Still, debt settlement is far less damaging to long term personal finance than Chapter 7. If debt settlement looks like a viable option, it should always be preferred to the nuclear option of Chapter 7, due to the long term, sometimes life-long consequences of completely reneging on debts.