Iowa has a reputation as being at the center of America’s bread basket. Surprisingly, agriculture makes up just a small percentage of the state’s total economy. In fact, Iowa has a highly diversified, modern economy. It’s one of the leading states for the health insurance industry and has a strong finance and real estate sector as well.
Iowa is also one of the few states in America which has been able to maintain a thriving manufacturing sector. Making up over 20% of its economic output, manufacturing provides tens of thousands of high-paying jobs and provides the state’s residents with real possibilities for upward mobility and a comfortable middle class existence.
Iowa has also taken the lead in the production and use of alternative energy. The state accounts for a huge portion of the total ethanol produced in the United States. It is also the leading producer of wind-turbine electrical power. Leading the nation, Iowa currently produces in excess of 15% of its total consumable electric power from wind turbines.
The state also has one of the nation’s lowest unemployment rates, at just over 3%. That, combined with its somewhat punitive bankruptcy laws, contribute to Iowa’s extremely low ranking among states by bankruptcy rates. Overall, if you’re looking for stable, job-abundant area in which to raise a family and build personal wealth, there aren’t many better states in which to live.
Still, Iowa’s solid economic footing and its hardworking citizenry aren’t a cure-all against financial woe. Despite its low rankings in almost all negative economic indicators, Iowa still has many citizens who have fallen on hard times and are looking for a way out. For these people, bankruptcy’s siren often beckons them towards its rocky shores. But there are better ways.
Debt settlement is an option that makes tons of sense for many debtors who have gotten in too deep for debt consolidation but who don’t want to ruin their financial lives for ten or more of their prime years, as often happens after declaring Chapter 7. Debt settlement can frequently solve problems that other options can’t.
Who is most likely to benefit from debt settlement?
Debt settlement lies somewhere in between debt consolidation and bankruptcy on the extremity spectrum of debt-fighting tools. For debt consolidation to work, the debtor will need to have a very solid income relative to the principal owed. Debt consolidation can be a fantastic option for those who have the means to carry it through to completion. But it can be a disaster for those who are likely to fall off the wagon and miss payments. This is because, with a home equity line of credit or similar debt consolidation loan, the debtor is trading high-interest, unsecured debt for low-interest, secured debt as well as a reduction in monthly payments and sometimes even a small reduction in principal.
The problem arises where there is an interruption in income. Unsecured debtors have essentially no standing in a bankruptcy proceeding. If the judge rules that the petitioner is insolvent and grants Chapter 7 protection, unsecured debtors lose everything. However, secured debtors have a first lien on the collateral. This means that, often times, they can force liquidation of the asset to collect their money. This is why a debtor should never undertake debt consolidation unless they’re certain they can follow through with the program. Done incorrectly, debt consolidation can leave you homeless or without a car.
Debt settlement, on the other hand, avoids converting unsecured loans to secured loans. It also has the huge benefit of being able to eliminate up to 75% of the principal amount of the loan. That means that, in some cases, debt settlement may be able to accomplish nearly the same thing as bankruptcy.
Of course, there are downsides. Debt settlement typically involves ceasing payments to the creditors. This is virtually guaranteed to sharply reduce the debtor’s credit score, by as much as 150 points, and it all but ensures there will be multiple non-payment notes on the credit history. On the flip side, credit ratings can be rebuilt fairly easily, and a strong history of repayments can overcome a couple of non-payment notes.
Compare this with Chapter 7, where the debtor will be unable to get any kind of unsecured financing, probably for ten years. This also means that for a large chunk of their prime years, the debtor will not be able to get any kind of small business financing and may not be able to serve in any executive capacity for a private firm. It also means government security clearance they have will be revoked and they may be unable to work in many jobs for decades. Also, one of the worst aspects of going through Chapter 7 is that, especially in the case business insolvencies, many of the creditors will be local. This can cause the debtor a feeling of lasting shame and can foster ill feelings among unpaid creditors.
For these reasons, debt settlement is always preferred to bankruptcy.