With a population of 10,146,788 residents, North Carolina has a poverty level of 16.4 percent. The state’s total workforce consists of 3,878,800 people. The top three career fields are Office and Administrative, Sales, and Food Preparation. The average worker makes $46,868 annually, which is about $4,000 less than the national average.
North Carolina has a statewide unemployment rate of 6.9 percent. The biggest city, Raleigh, is at 7.6 percent. The next largest is West Raleigh at 6.2 percent, followed by Greensboro at 8.3 percent. The average resident is marked by major credit bureaus as having a 679 credit score, which puts them in the good range. The average credit card debt per resident is $6,533.
Due to such high unemployment rates and poverty level, residents of North Carolina can find it difficult to keep up with their debt obligations. If you live in this great state and are struggling to pay your minimum payments, debt settlement is a process that can help you regain control over your financial future.
What Is Debt Settlement?
Debt settlement is a process through which a debt settlement firm works with the creditors you owe to agree upon a settlement price for your debt. Once you contact a debt settlement company you will typically be setup with an escrow account. This account is where you send in your minimum monthly payments for your debt load, or as much as you can afford to contribute each month.
Once this escrow account starts to receive funding the debt settlement firm will contact the lenders you owe to negotiate a payoff settlement. The settlement firm will offer the lenders a lump sum of money, which is less than the amount of debt owed, to settle the account. For example, if you owe $8,000 in debt, the settlement firm may offer the creditor a settlement of $5,000.
If the lender agrees to the proposed settlement the debt settlement firm will inform you. Then you will have to give the authorization to release the specified amount of money from your escrow account to fund the settlement for the creditor.
What Are The Benefits of Debt Settlement?
With debt settlement you are able to gain assistance in the stressful process of paying off your debt. Some other benefits include:
- One Monthly Payment To The Escrow Account
- You Don’t Have To Negotiate With Creditors
- Many Debts Are Settled For Less Money
- You’re Able To Get Out Of Debt
What Are The Disadvantages Of Debt Settlement?
While there are many benefits to using a debt settlement firm, there are some negative effects you need to be aware of before agreeing to this type of debt negotiation. These include:
- Creditors Will Report Missed Payments
- Damage To Your Credit Score And History
- Can Negatively Affect Your Ability For Lending In The Future
When you’re working with a debt settlement firm it’s important to realize they’re having you fund an escrow account. This replaces your minimum monthly payment with lenders. This means the lenders you owe aren’t receiving any money until an agreed upon settlement is made.
During this type of negotiation between the debt settlement firm and your lenders, the major credit bureaus will report that you were delinquent on payments to your lenders. This can drastically reduce your credit score the longer the delinquencies go on. Also, it’s important to note that lenders will make a note on your credit history with their firm that you settled the debt for less than you originally owed.
All of these factors can appear negatively on your credit report. When you apply for funding in the future a creditor may reject your application due to the ramifications of the debt settlement process.
Who Qualifies For Debt Settlement?
There are only a few requirements to qualify for debt settlement.
1.) You’re Able To Make A Monthly Payment Into A Settlement Account
2.) You Must Be Delinquent For Several Months On Your Debt Accounts
Typically anyone that has debt, a job, and is way behind on their monthly payments can qualify for debt settlement. The necessary amount of debt for a debt settlement firm to accept you as a client varies depending on that individual firm’s requirements.
What Debts Can I Have Settled?
There are many types of debt that can be settled by a debt settlement firm. These include bank loans, installment loans, credit cards, store cards, gas cards, business debts, and other unsecured loans.
There are a few debts that aren’t eligible for settlement. These include educational loans, mortgage loans, auto loans, back taxes, child support, and bail bonds.
For a complete list of which debts you have that can be settled, it’s a good idea to send a list of them to a debt settlement firm for further review.
Are There Any Laws Regarding Debt Settlement?
There are laws pertaining the debt collection and settlement process. The most important for the state of North Carolina is the maximum amount of interest that a collection agency is able to charge is 6 percent.
Beyond the state scope, the Federal Government as a collection of laws that govern debt collection. These are called the Fair Debt Collection Practices Act or FDCPA. It’s a good idea to read over your list of rights before dealing with a debt collection or settlement firm.