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Cleveland is one of those unassuming cities people think of but don’t really think of. It’s home to Lebron James, which is where the city finds most of its fame. It’s also a city that went through a difficult time when the economy crashed in 2008. With many industrial jobs driving the city’s workforce, many people were left jobless and in poverty when factories closed following the crash. Today, the city is bouncing back, but it’s taking more time than most people assume. What was once a lovely city is now one getting back on its feet, and the evidence of hard times is evident when you walk through many neighborhoods and past the boarded up windows downtown.

Cleveland is making a comeback, but the city is still struggling. With a poverty level of 34.7%, this is the city with the eleventh highest poverty rate in the entire country. That’s devastating, and it’s not easy to live like this. Despite the average household income situated at approximately $51,049 per year, many people cannot afford to make ends meet. Their average $5,166 credit card debt bills are going unpaid in favor of buying groceries and paying their mortgage and utilities, and people are struggling. For many debt settlement seems to be the only way to go.

Debt Settlement in Cleveland

Debt settlement in Cleveland is not for everyone. It’s for those who meet specific criteria and understand how it works and who it’s best for. The best candidates for debt settlement are:

  • Those with $7,500 worth of debt or more
  • Those with only unsecured debt
  • Those who cannot afford to make their monthly payments
  • Those who have already missed several payments to creditors

Debt settlement works best if you are late on your payments. The way it works is a professional debt settlement company or attorney calls your creditors and offers them a portion of what you owe paid to them at one time on a specific date within five years or so. This amount is less than you owe, but it’s a guaranteed payout. This means the creditor is going from getting nothing from you to getting a portion of what you owe. They see it as getting something when you’re currently paying nothing.

If you aren’t making your payments late or missing them all together, creditors aren’t open to working with you. You’re paying what they need, so why would they let you pay less? In addition to this, there are several statewide laws associated with debt settlement that you must know. Your debts must exceed $7,500. They must be unsecure debts such as credit cards, medical bills, and even student loans. Car loans, mortgages, and other tangible property loans are not permitted in a debt settlement case.

Is Debt Settlement Beneficial

Debt settlement can be beneficial to Cleveland residents, most specifically where their credit is concerned. When you make a late payment, creditors report it once it reaches 30-days late. Your credit score drops significantly at this point, and the negative remark remains on your credit report for the next seven years. Each time you make a late payment or miss one completely, your score drops lower and lower. Credit scores drop fast, but it’s difficult to raise them quickly. Now you cannot afford to take out another loan, to get good rates on things you need to finance, or even get a job.

When you settle debts, the creditors agree to stop reporting your payments at delinquent. This helps your score stay where it is. It doesn’t help it right away, but it stops hurting. Your on-time payments and positive credit reporting from this point forward is what raises your score.

The other benefits of debt settlement in Cleveland include owing less. You’ll settle for less than you owe, which means you can pay off your debts sooner, and you can pay them off for less money. You’re also going to have one payment and one interest rate rather than several from this point forward. You’ll learn some important credit counseling and financial information along the way, and it’s going to help you.

There are many resources available to help you with debt settlement laws and information. The BBB can tell you which attorneys and companies are the best in Cleveland so you know you’re working with a reputable company, and the federal government’s website can help you understand more about the law regarding debt collection. One law to be aware of before you begin this process is acceptance. Cleveland debt collectors are under no legal obligation to settle debts even if you’re late or not making payments. They have several years from the date of your last payment to sue you for the money you owe, and they might want to take that route if the statute of limitations has not passed.

Do not agree to any debt settlement programs that want money up front, that promise to get rid of your debt, or that promise to fix your credit. Know what you’re working with, know what your legal rights are, and do your due diligence.