The Los Angeles Metropolitan Statistical Area is the second largest economy, by gross metropolitan product, in the United States, just behind New York City. As part of this thriving and diverse economic zone, Riverside, California has long ridden the coattails of some of the most dynamic and influential industries and companies in the United States.
From Hollywood to Hughes Aerospace, Los Angeles has a storied history of producing some of the greatest innovations and most zeitgeist-shaping products in the history of the country. Today, the Los Angeles area, of which Riverside is a prominent part, has one of the most diversified economies of any city in the United States. Unlike most of the country, manufacturing still plays a vital role in the Los Angeles economy. Driven by the Port of Los Angeles, the largest of its kind in North America, factories avail themselves of the influx of raw materials to assemble everything from aircraft parts to toys.
Riverside itself has many railroad lines running through it and is one of Los Angeles’ major centers of manufacture. Everything from electronics to auto parts to heavy machinery is assembled there. With this comes a plethora of well-paying, middle class jobs.
But like other areas of Los Angeles, Riverside has its share of economic woes. While the California unemployment rate is relatively low, the official rate for Riverside is just over 7 percent, which is quite high for a city of its size. Also, the city, like other locales around Greater Los Angeles, was slammed by the housing crisis. Many of its homeowners lost most of their net worth. Few have completely recovered.
It’s not surprising that California, on the whole, leads the nation, year after year, in bankruptcy cases. In a state that took such massive hits during the recession of 2008-2009, the recovery has been protracted and sluggish. For many more of the state’s residents, particularly in Riverside, the benefits of the mid-2000s economic boom never accrued to them in the first place.
With an entrenched underclass that is each year less upwardly mobile, Riverside has a high annual number of bankruptcies, especially for such a relatively small city. For many of those who file for Chapter 7, their lives will never be the same again. It’s extremely important for those considering filing for Chapter 7 to fully understand the risks and costs of a bankruptcy. But it’s equally important to understand all alternative debt management strategies, even if the debtor’s situation appears hopeless.
How can Riverside residents get rid of debt without declaring bankruptcy?
There are three main strategies that a debtor can follow to eventually get rid of what he owes without declaring bankruptcy. The first is to simply ignore the debt. Almost no financial counselor will ever recommend this option, but it can be viable if the debt owed is less than about $1,000. The truth is that creditors will almost never pursue debt amounts of more than $500 in court and will only rarely go after debtors for amounts under $1,000. Non-payment of bills will result in negative marks on one’s credit score. But it certainly wouldn’t make any sense to declare bankruptcy over such small amounts. And other debt management strategies tend to be geared towards larger sums.
The second strategy that a debtor can use to reduce or eliminate their debts is consolidation. Debt consolidation is a good strategy for those who have large amounts of steady income and wish to replace high-interest, unsecured debt with low-interest secured debt. It is usually carried out via a home equity loan or other loan backed by a high-value physical asset.
Finally, there is debt settlement. Debt settlement often allows the best of all the debt management strategies. It can eliminate large amounts of the principal owed without devastating the borrower’s credit rating. It can eliminate high interest payments without putting the debtor’s house at risk. The only downside to debt settlement is that it almost always results in a damaged credit rating. This can be as much as 150 points. But with a good credit repair strategy, this hit to the debtor’s credit rating can be reversed, usually within a year.
One of the most attractive features of debt settlement is the possibility to have large portions of the debt wiped out. This is possible because large debt settlement companies often have hundreds or even thousands of accounts with each major credit company. Whereas an individual consumer would have little pull with the likes of Capital One, a debt settlement company may be able to offer a million-plus dollar lump-sum payoff. Such deals can prove a phenomenal value to the debtors, who may see the principal owed reduced by 50 percent or more.
Who can most benefit from debt settlement?
So, who can benefit most from debt settlement? Broadly speaking, debt settlement will most benefit those who have unsecured consumer debt, who have addressed the underlying problems which led to the mounting debt in the first place and who still have sufficient income to complete the debt settlement program within at least three years.