Even though debt settlement services offer several wonderful benefits, it is vital that you understand some of the disadvantages associated with using the service. This will help you make a well thought out decision regarding such services. Actually, the gains are usually more than the disadvantages, particularly when you or your business is deep in debt. This write-up will highlight some of the pros and cons of debt settlement for your consideration.
Debt Settlement Provides a Much Faster Means of Handling Your Debt
If you take advantage of debt settlement services for your Australian loans, unsecured or secured, a large portion of your debts can be resolved in just about 2 to 3 years time depending on your circumstances. Thus, you will get a considerable part of your debt paid off over an extended time period, and return to the path of financial recovery. However, the negative aspect of this is that it will take a bit of time, so you really need to be patient. Before you start seeing the benefits from the efforts you are making, it can take several months.
Debt Settlement Will Help You Avoid Dealing with Hostile Collectors
A debt relief company can actually help reduce the amount of debt you own by a large percentage through negotiation methods, regardless of whether the debt is a result of personal loan issues or business loans in Australia. A representative gets in touch with all the individuals and organizations you owe money and handles them on your behalf. This way, you will not have to confront hostile collectors. However, you should be aware that the negotiation process has some disadvantages. Some of the people you owe money may not be willing to talk, some may carry on trying to get their funds from you through lawsuits and you might have to take care of the debts accordingly.
You should realize that many debt settlement service providers do not hire attorneys, even though they are adept at negotiating debt. Therefore, if a legal issue arises with a number of the debts that you are trying to resolve, the firm cannot provide you with any guidance, legal representation or counsel. This is a big disadvantage when you require guidance as you will end up spending extra money to engage the services of legal practitioner.
You Might Still Be Required to Pay Taxes
Lastly, even though a considerable portion of your debt may be forgiven you as a result of negotiations and debt settlement services, you may still be required to provide taxes on the part of your debt that has been forgiven. If you do not wish to pay any taxes, you may need to file certain forms with the tax offices or the treasury department to prove that you are experiencing financial hardship. You should consider the benefit of getting a number of the debts you owe forgiven against paying taxes on the amounts that have been forgiven.
Generally, debt relief companies do not eliminate all your debt; they only make it simpler for you to pay back the debts you owe. If you still find it difficult dealing with the reduced payments, bankruptcy may be a good option. Typically, payment plans are setup over a period of five years and if you do not posses the cash flow higher than basic living costs to repay the debt you owe within that time frame, you should seriously consider bankruptcy.