Kansas is home to almost three million residents, and many of these individuals thoroughly enjoy their lives in this area. The state is known for having a stable economy with many job opportunities, and it also provides residents with ample outdoor recreational activities, great educational options, a splendid culture and more. While life is carefree for many in Kansas, some have serious financial concerns. Many live with a tight budget that makes it difficult to make ends meet, but others are so stressed by their finances that they cannot make their minimum monthly payments. If you fall into this group, you may be dealing with harassing calls from debt collectors. Scouring the Internet in hopes of finding a debt relief solution that will work for you is a common step individuals in your shows take. Debt settlement is one debt relief option that is most commonly considered by individuals who are unable to make their debt payments, and it may be a great solution for your needs as well.
Why Personal Budgets Are Tight in Kansas
As you might imagine, many Kansas residents are well-off, and some own their house free and clear, have no credit card debt and have a spectacular balance in their savings and retirement accounts. On the other end of the spectrum, the U.S. Census Bureau states that 13 percent of residents live in poverty. The average resident who falls between these two ends of the spectrum also has financial issues. The per capita income in Kansas is approximately $27,000. This provides very little money to live on each month. The typical monthly mortgage payment for homeowners in Kansas, however, is $1,282, and renters pay $757 per month for their homes on average. When such a large chunk of an already limited amount of funds is taken up by housing, you can see that many people have trouble making ends meet. If you are in a situation where you cannot make your debt payments as agreed, debt settlement should be considered as a method of debt relief.
How Debt Settlement Works
When you settle your debts, you are asking your creditors to agree to write off some of the debt that you owe. Some creditors may agree to cancel hundreds of dollars of debt or more, but others may not agree to cancel any debt. When debt settlement is effective, it can result in faster debt reduction and lower monthly payments. Typically, a skilled, experienced negotiator produces effective results for individuals, but there are no guarantees. When settlement is not effective, the more serious form of debt relief provided by bankruptcy may need to be considered.
Who Should Settle Their Debts?
When your creditors agree to settle debts, you will benefit financially in many ways. However, the creditor loses money because you do not pay back the full amount that you borrowed. The creditor reports their settlement of debt on your credit report, and this creates a negative hit on your report. Credit scores may be damaged for several years or more as a result. Therefore, the main candidates for debt settlement are individuals who already have a lower credit score because of their situation or who may not qualify for other forms of debt relief. For example, some people who have managed to maintain a good credit rating up to this point may find debt relief through a consolidation loan. Debt settlement is typically considered as a last resort before turning to bankruptcy.
Can You Settle All Debts?
Some people who learn about debt settlement may be excited to learn that their debt balances can be reduced simply by asking creditors to do so. However, keep in mind that debt settlement cannot be used for all debts. If you have a secured loan, such as a home mortgage or car loan, you will need to make these payments in full or risk repossession or foreclosure. Secured loans are typically not included in a debt settlement plan. In addition, government-secured loans, such as most types of student loans, also cannot be settled. If you have private lender or creditor accounts, such as credit cards and some student loans issued by private banks, you can include these in your settlement plan. Your credit counselor can review your financial situation and can advise you about which accounts may be settled.
The thought of writing off debt balances and enjoying the immediate relief of lower monthly debt payments may sound too good to be true. There are many benefits associated with settlement for those who are in serious debt. However, there are also downsides to consider and alternatives that may be better in some situations. Take time to thoroughly research and compare the options so that you make the right decision about your finances.