For many DC residents, debt settlement may be the only chance of regaining control of their finances. In a nutshell, the sum of individual debts as reported by DC residents of all ages rose by 8 percent in 2011 and became 6 percent higher than the national average. Even though the average debt reported by the residents declined from 2010 to 2011, it was still 7 percent higher than the national average.
If you are a resident of Washington DC, and you are not able to pay off your debts, then you should consider looking for debt settlement services. By so doing, you will be able to replace your multiple bills with one monthly payment on your medical bills, credit cards, etc.
The Socio-Economic Situation in Washington DC
Compared to the entire United States, residents of Washington DC have higher educational levels and more economic resources. Despite that, there is high poverty rate in this state! For instance, the 2012 American Community study revealed that 14 percent of DC residents are in poverty. This is in comparison to 16 percent national poverty level.
The same study revealed that about 32 percent of the city residents aged 25 and above reported being college graduates compared to 29 percent national average.
The biggest problem in this state is that educational attainment and economic resources are not evenly distributed across the state. Rural counties have higher poverty levels compared to the whole state. Women are poorer than men, and poverty is more prevalent among Hispanic, Black, Alaska Natives, and American Indian residents than among Asians and Whites. This group of residents also has lower average incomes and is not likely to have completed their college degree.
With the high cost of living in this state, residents are now using credit cards to settle their living expenses and pay their student loans. This has led to increased number of people seeking debt relief services.
How Debt Settlement Works
Once you enroll in a settlement program with a reputable company, a debt consultant will evaluate your financial situation. With this evaluation, the consultant will be able to work out a low-interest payment program with your creditors.
The debt consultant will then make an in-depth review of your earnings and expenses, alongside your debts to see how much you can be paying per month.
Once you have signed the required documents and agreed on the amount you will be paying per month, the debt consultant will begin the negotiation process with your creditors to reduce interest rates and get rid of late fees.
You will then be required to make one monthly payment to the debt settlement company, who will them distribute it amongst your creditors.
Debt Relief Laws/Regulations in Washington, DC
While the debtor is at fault for not paying their debts, various debt relief laws exist to protect them. Just to be clear, these laws are not meant to relieve them of the responsibility to pay off their debt, but to protect them from certain malpractices by the creditors that are termed abusive.
Washington DC follows a set of laws and regulations dealing with collection firms and agencies that collect debts. These laws are collectively called Fair Debt Collection Practices Act (FDCPA).
According to these laws, the debt collector should not:
- Use words DC or District of Columbia to imply that their agency is an instrument of the national government
- Try to convince their debtors to pay debts released in bankruptcy without clearly revealing the nature and result of the agreement and the fact that the debtor isn’t under any legal obligation to pay the debt
- Try to collect collection fees from the agency
The maximum interest rate that a collection agency is allowed to charge in Washington DC is 6 percent.
Despite these laws, it is important to note that the creditor is legally allowed to call the debtor and ask for payment and even sue them if the need arises.
Benefits of Debt Settlement
- Help improve your credit score, gradually
- Help you make reduced monthly payment
- Help reduce the nuisance of being called by your creditors
- Leaves you with a single monthly payment plan
- Will help you clear your debt within 2-5 years
While Washington DC is home to the nation’s capital, it also hosts many individuals that are struggling with debts. With a city average of about $5,500 of credit card debt, Washington is above the national average credit card debt. Fortunately for the residents, there are numerous debt relief programs that can help them consolidate their debt and start their journey to a debt free life. Prime candidates for debt relief are individuals who have minimal debt, have an excellent credit score and are able to make the monthly payments.