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As part of the Greater Los Angeles area, the Upper San Gabriel Valley forms part of one of the most productive economies in the world. With a gross metropolitan product of nearly $1 trillion, the area’s economy is larger than that of entire first-world countries, such as Switzerland and Qatar.

The area has one of the most diversified economies in the United States. Unlike much of the rest of the country, the Los Angeles area continues to have a thriving manufacturing industry. Other major industries include entertainment, the FIRE sector and tourism. The Los Angeles metro area is home to a large number of billionaires, highlighting the tremendous wealth concentrated in the state of California.

But just below the surface are plenty of difficulties. The area’s minorities were hit extremely hard by the 2008 housing crisis. While the state of California has a moderate unemployment rate of >5.5 percent, the Los Angeles area’s rate is considerably higher, at 7.5 percent. The Upper San Gabriel Valley was hit particularly hard by the recession between 2008 and 2010. The official unemployment rate for the Los Angeles area as a whole was a whopping 13.2 percent in 2010, which reflects that of the Upper San Gabriel Valley as well.

All this adds up to the typical socioeconomic picture of the United States, exaggerated to extremes in the state of California. There’s an upwardly mobile, high-earning upper middle class that seems nearly bulletproof to downturns in the economy. Below that, there’s a socioeconomically static underclass with few prospects of changing their station in life. These are the people who bear the full impact of economic crashes and live precariously, one paycheck or lost job away from the homeless shelter or jail. Unfortunately, as increasing middle class flight from the state picks up amid soaring housing costs, the underclass grows in both absolute number and proportion of the state’s population.

It’s not surprising, then, that California leads the nation handsomely, year after year, in number of bankruptcies declared. But for California residents in general and those in the Upper San Gabriel Valley in particular, there may be better options than the life-wrecking Chapter 7.

For some who are facing escalating personal finance crises, debt settlement may offer a viable way out.

Who Can Benefit From Debt Settlement, And Who Can’t?

Debt settlement won’t work for everyone. But if the debtor fits the following criteria, settlement may be the best course to take. First, the borrower should have unsecured, consumer debt. Debts which are backed by the government typically cannot be settled. Examples of such debts are student loans, alimony payments, child support and back taxes. People should be wary of any company that claims to be able to reduce or discharge these debts, as non-payment can result not just in fines but criminal charges.

The second criterion for debt settlement to work is that the debtor has identified and corrected any underlying behaviors that have led to out-of-control debt accumulation. If the problem’s not fixed, settling the debt will be little more than putting a band-aid on a gunshot wound. The debtor will quickly revert to his old ways and begin accumulating debt anew.

Finally, the debtor should have sufficient income to have a reasonable expectation of finishing the debt settlement program. One of the nice things about debt settlement is that, unlike debt consolidation, the penalties for non-compliance, once the program has begun, are minimal. However, if a debtor starts a debt settlement program without finishing, they could end up paying a bit in fees. This can be avoided by reading the terms of the debt settlement offer carefully and understanding exactly what’s expected of the debtor in order to complete the program.

What Are The Benefits Of Debt Settlement Versus Other Debt Management Options?

Debt settlement can be a particularly attractive option for those who still have some income but who may not be able or willing to convert their high-interest, unsecured debt to secured debt. One of the best parts of debt settlement is that it can often wipe away large portions of the principal amount owed. Since elimination of debt principal is the primary goal of bankruptcy, debt settlement can be a phenomenal option in cases where a high percentage of the debt can be erased.

The reasons companies will sometimes accept far less than the nominal amount of the loan or credit is that major debt settlement companies often represent thousands of clients with the major creditors. A single debt settlement company may be able to make a take-it-or-leave it offer on non-performing loans that can be worth millions or even tens of millions of dollars. For creditors, these types of deals can prove irresistible. The great part is that the bulk of the savings get passed on to the debtors, with the settlement company taking a small fee. Cases where debtors have been able to reduce the principal owed by as much as 75% are not totally uncommon. What’s more, this reduction in principal avoids all of the worst effects of bankruptcy, like not being able to get a mortgage or auto loan for ten years.