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Chicago is one of the country’s top economic centers. While its moniker, The Second City, comes from long holding the title of second most important city in the U.S., today, Chicago actually comes in third, just behind Los Angeles, when measured by gross metropolitan product.

Nevertheless, with an economy producing over half a trillion dollars per year in output, the city is a shining beacon of economic opportunity, ranking above many countries in total productivity.

The Chicago area features a highly diversified economy. With more than 60 Fortune 1000 companies headquartered there, including Boeing, Chicago has all but immunized itself from economic downturns. Unlike similar rust belt cities, Chicago’s manufacturing sector continues to thrive. The area is one of the main steel producers in the United States. And with a total labor force of 4.5 million, it has more manufacturing jobs than anywhere else in the U.S.

Another interesting aspect of the city’s economic life is that it has one of the highest minimum wages of any metro area in the country. With its minimum wage set to hit $13 per hour by 2019, employees on the lowest rungs of the economic ladder are treated with more fairness than elsewhere.

However, this picture of a pristine economy is not without its blemishes. The city has an official unemployment rate of 6.5%. That’s on the high end for U.S. cities, even for a major metro area. Additionally, the city is home to some of the poorest neighborhoods in the country. Many of these are primarily minority-inhabited and feature large swaths of their populations partially or completely dependent on government subsidy. The city also has one of the country’s largest populations of undocumented immigrants, who are unlikely to participate in the official economy and often live in grinding poverty and unsanitary conditions.

All of this adds up to a mixed economic picture that has translated into Chicago and the state of Illinois generally having some of the highest bankruptcy rates in the U.S.

While not all of those declaring Chapter 7 in Chicago could benefit from other debt-fighting tools, some could potentially benefit from a debt settlement program.

Why not just declare bankruptcy?

There are many strong reasons to avoid Chapter 7 bankruptcy. After successfully having all debts discharged through the bankruptcy court, it may seem that the debtor would be in a fantastic position. However, many challenges will continue to present themselves long after the debtor has left the courtroom.

While, most of the time, debtors will be able to keep their primary homes and main vehicles, they will often lose any vacation homes, luxury items, such as boats and RVs, and secondary vehicles. Illinois has relatively favorable bankruptcy laws. However, there are even situations in which someone’s primary residence may be ordered to be liquidated or where the eventual sale will have permanently attached liens.

What’s more, bankruptcy will result in the debtor being unable to get any kind of secured loan for seven to ten years. Unsecured loans may be likewise difficult to come by. This also includes any small business loans or short term financing.

Another thing to consider is that bankruptcy doesn’t erase various types of debt, particularly those ordered by courts or owned by the government. For instance, back taxes, child support, alimony and student loans are all exempt from bankruptcy discharge.

Who can benefit from debt settlement?

Generally speaking, those who can benefit from debt settlement are people who still have solid income and who have identified and corrected the underlying cause of the out-of-control debt. While debt settlement will typically damage credit ratings by up to 150 points, it won’t do anywhere near the level of damage as a bankruptcy note on one’s credit report. And someone who has gone through the debt settlement process will very likely be able to quickly restore their credit rating to prior levels. This may take less than one year. In the case of bankruptcy, there is virtually no chance of obtaining a credit card, auto loan or home mortgage for seven to ten years.

Another huge benefit of debt settlement is that it can often dramatically reduce the principal amount owed. Some of the larger debt settlement companies are fully capable of negotiating reductions of up to 75% of the amount owed. Such outcomes can wipe out nearly as much debt owed as outright bankruptcy but without all of the negative implications. And unlike debt consolidation, debt settlement does not trade unsecured debt for secured debt, which can lead to assets potentially being seized in bankruptcy court that wouldn’t have been otherwise, should the debt consolidator default on his payments.

All this adds up to a considerably attractive option for those who can continue making the appropriate levels of payments. However, there are some instances where even debt settlement is unlikely to resolve the debtor’s issues. In cases where the debtor has completely lost his income, as in sudden disability, or where the debts are very large relative to his income, bankruptcy may be the only viable alternative.

But if Chapter 7 can be avoided, debt settlement provides many of the benefits and few of the costs involved in pursuing bankruptcy.