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The state of Arizona has been going through what appears to be a recessionary phase for the better part of 2016. The employment sector recorded a 1.7 percent growth, matching the national growth. Bear in mind that the state has been recording an average employment growth rate of 4.1 percent since the great recession. Other key economic indicators also show that the state’s economy is lagging.

As a result, the state has and will continue to record poor export performance, slower gains in residential investment, low consumption spending, and an inventory draw down, which means tough times for ordinary state residents. Even though data showed a 2% growth in wages, many Arizona residents remain with massive amounts of unsecured consumer debt and are already exploring debt relief options such as debt consolidation or debt settlement.

Debt Settlement

Did you know that your creditor can forgive up to 50 percent of your debt if you offer to make a one-time payment of a given percentage of your debt? Well, now you do. If you are hearing this for the first time, it probably sounds too good to be true. But it actually is. But what’s the catch? There’s no catch, really. It’s just a company protecting its bottom line. Debt settlement works for unsecured debts such as telephone bills, medical expenses and credit card bills. This process is referred to as debt settlement.

Prime Candidates

If you are struggling to keep up with your unsecured debt payments, you might want to consider debt settlement in Arizona. It might be a good option for you if you have maxed out your existing credit cards, can’t keep up with the payments and are on the verge of walking away from the debt. A credit card company will only agree to this arrangement for two reasons:

  •  If there is a likelihood that you won’t be able to pay the debt. It is an unsecured debt; there’s no collateral hence there’s not much the company can do to regain monies owed.
  •  The company itself is also going through a rough patch financially.

Typically, lenders don’t advertise debt settlement but will readily accept your offer if you are lagging behind on your payments and you are on the verge of filing for bankruptcy.

How Debt Settlement Works

You can approach a debt settlement company, there are many of them in Arizona, and ask them to negotiate with your creditor on your behalf. You can also decide to represent yourself. The goal is to look as desperate as possible in a bid to convince the lender to accept your offer. You will negotiate with the creditor to accept a payment less than what you owe. The creditor may decide to accept or reject the offer based on their judgement on your ability to pay your debt in full. If your creditor accepts your offer and writes off your debt, make sure that it has been put in writing.

The Impact of Debt Settlement on Your Credit Score

Debt settlement has its advantages. One of them is that you get a chance to try and get your finances in order and keep you from filing for bankruptcy. However, the debt will still appear on your credit report and will remain there for seven years since you did not pay it in full. This will lower your credit score and reduce your chances of getting another loan.

Arizona Fair Debt Collection Laws

Under the Fair Debt Collection Practices Act (FDCPA), the government of Arizona prohibits debt collection agencies from the following practices:

  •  Giving the impression that they represent the government of Arizona or any other state government or federal agency.
  •  Falsely claiming the debt is not paid or misrepresenting the amount of existing debt.
  •  Trying to collect any unauthorized fees.
  •  Sending any written message that mimics a judicial process from a lawyer, a government entity, or a court.

Arizona’s poverty rate is at around 17 percent, just slightly above the national rate and among the highest in the country. While some of the numbers may seem okay at face value, experts worry that they may be masking the rising income disparities in the state. Currently, Arizona is ranked second in the list of states with the highest gap between the rich and the poor. With the state’s population continuing to grow, the state of the economy in Arizona may deteriorate for low-income earners in the state who, mind you, are already pinching pennies. So if you are struggling with credit card debts, you are probably not alone.