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The state of Nevada has had one of the most unique economies in the country since the middle of the 20th century. Driven primarily by tourism, the attractions of Las Vegas, Reno and Lake Tahoe have fueled a boom unlike any other. As late as the 1930s, the state was little more than an expansive desert featuring a few whistle stop towns and a thriving, if small, capital in Reno. It wasn’t until Las Vegas really started taking off in the 40s and 50s that Nevada began blossoming into the international tourist destination that it is today.

Throughout the 40s and 50s, extensive nuclear testing and support operations brought tens of thousands of military men and their families to the state. Unlike other remote military installations, many of these families became permanent residents of the state, finding work in the casinos and resorts of the Las Vegas Strip and downtown area.

From the 60s onward, Las Vegas, Reno and Lake Tahoe became world-famous destinations for poor and rich alike. As the population exploded, great wealth was created that was quite evenly distributed among the population. Casino jobs typically paid well and still do today. The enormous number of construction projects and buildings has created a sort of Western Mecca for blue collar job seekers.

Today, the Nevada unemployment rate is low, at just 5%. This reflects a state economy that, while more sensitive to economic downturns than most areas, has had a perennial resilience unlike most of the rest of the country. Yet there are still problems endemic to Las Vegas. It has, perhaps, more problem gamblers than any place else in the world per capita, an unsurprising consequence of the easy availability of limitless opportunities to gamble. Also, like much of the Southwestern United States, it has a large population of illegal immigrants, many of whom do not participate in the official economy.

All this means that Nevada has frequently led the ranks of the states with the highest rates of bankruptcy filings. This points to a state with many of its residents routinely experiencing some degree of financial distress.

But Nevada residents should know that filing bankruptcy is not the only option available for those who have fallen on hard times. The various forms of debt settlement can allow people to escape from debt without the pernicious consequences of a bankruptcy filing potentially affecting them for the better part of the rest of their lives.

What is debt settlement and who can benefit?

Debt settlement provides a middle ground between debt consolidation and Chapter 7 bankruptcy. Because debt settlement companies can often negotiate reductions in principal amounts by up to 75%, debt settlement can be an attractive alternative to declaring bankruptcy for those people who do not have sufficient income relative to their debts to be able to pay them off in three to five years, as would be the case in a debt consolidation scenario.

Debt settlement has a few major advantages. The first is that it can permanently eliminate debts for much less than it would cost to pay them off in full. And it can do this in relatively short periods of time. Many debt settlement programs operate on time frames of less than 36 months.

The second major advantage is that it can get the same results as bankruptcy, the total elimination of all unsecured debts, without most of the adverse affects. Credit scores can still be affected by 50 to 100 points by debt settlements, but people who have settled their debts can often still get mortgages, auto loans and business financing with little difficulty afterwards. For those who declare Chapter 7, their ability to get any loan, secured or otherwise, is virtually destroyed for a minimum of seven to ten years.

The third major advantage is that, unlike with debt consolidation, debt settlement can provide a route for those with little chance of paying back the principal amounts on their debts a way to avoid bankruptcy. Because settlements can often times be as low as 25% of the nominal amount of the debt, people who have experienced serious reductions in their income may still be able to find a permanent way out of debt, without the grave consequences of a bankruptcy note on their credit history.

Generally speaking, the people who will potentially benefit most from debt settlement are those who have major, unsecured debt and who still have income but who could not resolve their debts within three to five years using debt consolidation.

While debt settlement is much more desirable than declaring bankruptcy, the hit to credit scores and notes of non-payment in full will still remain on the settler’s credit history for seven to ten years. For this reason, only those for whom debt consolidation is not appropriate should pursue debt settlement.