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California is a state of extremes. From the snow capped mountains of the Sierra Nevada range, with the highest peak in the contiguous United States at Mount Whitney, to the blood-boiling heat of Furnace Creek, one of the lowest inhabited towns in the world, at 190 feet below sea level, the state’s climate, geography and wildlife are as varied as any state on Earth.

But the tendency towards polarization also extends into the sociopolitical and economic realms. If Stockton is below the economic freezing point, then San Diego is the California’s economic Mojave, having one of the hottest economies in the United States.

San Diego has a highly diversified economy driven by important military installations, one of the largest ports on the West Coast and a private sector with strong tourist, biotech and wireless communication industries. The San Diego zoo is famous the world over for being one of the largest, most eclectic curators of exotic wildlife in the world. The region is widely regarded as one of the most beautiful in North America, featuring golden beaches, towering mountains and burning deserts all within an hour’s drive. Charles Lindbergh International Airport is located just three minutes from downtown and is the busiest single-runway airport in North America, and certainly the most conveniently located.

The city has repeatedly been ranked as one of the safest and nicest places to live in the United States. It has been noted as a great place to raise a family as well as the best place to start a small business in the United States by Forbes Magazine. All told, San Diego is a fantastic place to live and to visit, at least if you can afford it.

But therein lies the city’s one major fault. The same Forbes Magazine has consistently ranked San Diego as one of the least affordable places to live in the country. Its average home price of nearly $500,000 means that, while homeowners have benefited from the rising real estate tide, few working class families can afford to purchase a new home.

This has led to a situation where families must stretch budgets, commuting hours each day to and from far-away suburbs that still require huge portions of workers’ incomes just to keep a roof over their head and the lights on. And while San Diego’s unemployment rate is just 4.5 percent, one percent less than that of California as a whole, the real problem at California’s Southern extremity is extreme lack of affordability.

Such high living costs have led to an economy which is thriving yet one that is filled with middle-class working households on the brink of financial catastrophe. For San Diego residents who are facing the financial abyss, Chapter 7 may seem an alluring option. But that’s not a road one should tread down lightly. For many San Diego residents considering their debt management options, debt settlement may provide a quicker, less painful exit strategy from the grips of financial despair.

How debt settlement can help some of San Diego’s struggling residents

Generally speaking, there are two main strategies for those facing large, unmanageable debt loads, besides declaring bankruptcy. They are debt consolidation and debt settlement. Debt consolidation can make sense for some more affluent debtors who can easily guarantee the continued earning of a large income relative to the debt amount. But it’s not recommended for those who have impaired incomes or debt loads that are any more than one or two times their annual income. The reason is simple. Debt consolidation trades high-interest, unsecured debt for low-interest, secured debt, usually through a home equity loan where the house is used for collateral. This means that if the program is not completed, the debtor will likely lose his home, a risk not worth taking for those who may have difficulty completing the debt restructuring.

Debt settlement, on the other hand, does not create additional collateral or trade one type of loan for another. It simply eliminates the debt wholesale, in one event. The downside of debt settlement is that it almost always tarnishes the debtor’s credit rating. However, this can easily be repaired in a few months to a year by following a solid credit-repair strategy.

But debt settlement has one enormous benefit. It can often erase large portions of the principal owed. The bargaining power of large debt settlement companies can be put to work for the clients, sometimes reducing the settlement amount to just fractions of what the nominal amount was. This is made possible by companies that control thousands of accounts, valued at millions of dollars, that can offer major creditors the opportunity to permanently remove non-performing debts from their books. Many creditors will jump at this opportunity because they know the chances are high that, should they refuse the offer, they will never see more than pennies on the dollar from the majority of those loans.

Finally, debt settlement avoids the major pitfalls of bankruptcy. If the debtor does go through with a Chapter 7 proceeding, they will likely be unable to take out an auto loan, mortgage or small business financing for seven to ten years.