Utah is a fascinating state to call home, and more than three million residents enjoy this privilege. The area has intense natural beauty through canyon lands, mountain peaks and more that dress up the landscape and that provide residents with outdoor recreational opportunities throughout the year. There are numerous cultural and sporting events for residents to enjoy in their free time, and many stay busy with lucrative careers during the week. Financial wealth has been attained by many in Utah, but debt is also a common issue for some residents. In fact, some people are so heavily burdened by debt that they are unable to make their minimum monthly payments on time. If you can relate to this, you understandably may be seeking financial relief for your debt situation. While some individuals will choose debt consolidation or bankruptcy for relief, debt settlement may be right for your situation.
The Typical Personal Budget in Utah
You may be wondering why high debt balances are so common in Utah. Debt typically accumulates when more charges are made each month than can be paid off, and this issue is often caused by having a tight personal budget. A closer look at what the typical budget in Utah looks like can be enlightening. The U.S. Census Bureau states that more than 11 percent of the state’s population lives in poverty. Even the average individual often has a tight budget because of low income. The per capita income in Utah is only $24,686 per year. While income is low, expenses can be rather high. Among the high expenses residents are responsible for each month is housing. The average mortgage payment that Utah homeowners make each month is $1,428, and renters pay on average $887 per month for housing. When housing is factored in with other common expenses, you can see that the typical budget is stressed. High debt payments only add to the financial burden that many people, and you may be wondering if debt settlement can help you.
What Debt Settlement Accomplishes
There are major differences between the different forms of debt relief available, which are debt consolidation, debt settlement and bankruptcy. By learning what debt settlement accomplishes, you can determine if it will be helpful for your situation. With settlement, either you or a professional credit negotiator will contact your creditors individually and will make a case for your outstanding balance to be reduced. Professional negotiators often employ excellent tactics that influence creditors in your favor, so their services may be put to great use. If your creditors agree to settle your debt, a portion of your outstanding principal balance will vanish. This means that it will take you less time to pay off your debt balance in full, and you will also benefit from lower monthly debt payments immediately. Clearly, this is an excellent option for many people, but it is important to note that this option is not well-suited for everyone with credit card debt.
Like bankruptcy and unlike credit card consolidation, settlement can damage your credit scores for years to come. Consolidating your debts into a single, low interest rate account should be considered first if you have good credit scores currently. However, if your scores are already damaged because of your inability to make payments, settlement may be effective. Generally, your creditors will only consider settlement if you have demonstrated an inability to make payments, such as by making a series of late payments. Because of this, the ideal candidate will have a lower credit rating and will have late payments on the accounts in question.
Which Debts Can You Negotiate?
You should be aware that not all debts can be negotiated. For example, secured loans and government-backed loans cannot be negotiated, but private loans can be negotiated. This means that you cannot settle a home mortgage, an auto loan or most types of student loans. You can typically negotiate credit card accounts and some private student loans. Before you decide to pursue settlement rather than bankruptcy, carefully review the types of debts that you have to determine if settlement may be effective for you. Because there are no guarantees that your creditors will agree to a settlement, you may wind up filing for bankruptcy if settlement fails.
Debt settlement is a serious matter that offers both long-term benefits as well as long-term drawbacks. It is important to understand the full range of pros and cons associated with settlement and to compare this option against other forms of debt relief before you act. If you are thinking about proceeding with debt relief through settlement, reach out to a credit counselor to discuss your situation and to ensure that this is the right move for you to make.