subject: Pros And Cons Of Debt Settlement Services [print this page] Debt settlement services clearly have some amazing benefits, but in order for you to make a prudent decision about such services, you need to get familiar with some of the cons associated with the service as well. You will find that the advantages often outweigh the disadvantages, especially when you are in deep debt. Here are some pros and cons for you to consider.
Within a two to three year time period you can have much of your debts resolved if you avail yourself of debt settlement services. What this means is that over an extended period of time you will get much of your debts paid off and you will be well on your way to financial recovery. The downside to this however is that you will have to be patient; debt settlement services are a timely process, and it can take many months before you even begin to see the benefits from your efforts.
A company offering you debt relief services can actually get your debts down to a fraction of their original amount through negotiation processes. A representative contacts all of your existing creditors and deals with them for you; this saves you from having to deal with aggressive collectors. Of course, there are disadvantages associated with the negotiation process too; not every single creditor will be so willing to negotiate, some may continue to pursue you via lawsuits, and you will have to deal with the debts accordingly.
While debt negotiators are definitely skilled at negotiating debt, you will have to realize that many companies offering debt settlement services do not employ attorneys. This means that if you run into a legal issue with some of the debts you are dealing with the company will not be able to offer you any guidance, counsel, or legal representation. This can prove a disadvantage when you need counsel and have to pay additional fees to get legal advice.
Finally, while you might have a large part of each debt you have forgiven through Debt Settlement Services and negotiation, you could still wind up paying for taxes on the forgiven part of the debt. You may have to file special forms with the Internal Revenue Service to prove a position of financial hardship in order to avoid paying taxes at all; you will have to weigh the benefit of having some of your debts forgiven versus having to pay taxes on the forgiven amounts.
