The majority of business owners are committed to ensuring that their enterprises succeed, and to that end, many end up incurring personal debt as a means to keeping things running smoothly during difficult times. It is estimated that nearly a quarter of all business owners use personal credit cards to finance business needs.
No matter if you used a bank loan, a credit card, or a combination of methods to further your business prospects, if you did so under your own name, you may now be struggling to find ways to get out from under that debt burden. If your business has begun to flounder, the situation may feel even more dire.
The good news is that there is a helpful strategy for alleviating particular kinds of business debt and doing so outside of bankruptcy. The technique is referred to as debt settlement, and it can be a valuable tactic for eliminating debt in a period of between 24 and 48 months. The following paragraphs help explain how the process typically works.
Facts About Debt Settlement
Once you have entered a debt settlement program, a company whose services you have engaged will work collaboratively with creditors, urging them to settle outstanding amounts for less than is currently owed. The surprising fact of the matter is that many banks, credit card issuers, and other lenders routinely agree to accept less than is due to them on debts of this nature. The key is to have the right people negotiating on your behalf.
It is common for business owners to use the services of debt settlement firms so they do not have to spend time and energy engaging in negotiations with creditors themselves. Because debt settlement firms are staffed by experienced negotiators, they often achieve favorable deals that generate real financial savings, lower your debt load, and establish a payment plan that helps you attain debt-free status faster than you likely thought possible.
How Debt Settlement Programs Work
Generally, if you are interested in securing the help of a debt settlement firm, you may be asked to answer a series of questions online to determine whether your debts qualify for this type of assistance. Someone from the debt settlement company will then make contact with you to discuss the services they offer. If, after considering all the facts, you decide to move forward with a program, you will likely follow a pattern similar to the following:
First, you will begin making monthly payment deposits into a federally-regulated savings account that is in your name.
Then, when you have accumulated a significant amount of funds in that account, the debt settlement negotiators will contact your creditors to start the bargaining process.
Whenever one of your creditors agrees to the terms of a proposed settlement, the debt settlement firm will contact you to ask for your agreement.
Finally, when all of the accounts you have placed with the settlement firm are fully settled according to the terms reached with the creditors, you will be free from the debt that was causing difficulties in your business and your life.
It should be borne in mind that debt settlement firms regularly charge fees that run between 15 and 25% of your outstanding debt, but these charges are only initiated if and when a settlement agreement has been reached with a creditor, and you have given your approval. Even so, it is often the case that the debt relief achieved in this way can greatly lower your overall debt load.
How to Qualify For Debt Settlement Assistance
Business owners need to realize that secured debt obligations like vehicle loans or mortgage notes cannot be included in a debt settlement program. Delinquent taxes and federal student loan balances are also ineligible. In order to establish which of your debts may be negotiated through a debt settlement company, it is best to get in touch with a representative of such a firm for a full evaluation of your current liabilities.
Some of the key indicators of likely eligibility for debt settlement help include:
1. You currently owe at least $7,500 in unsecured obligations such as personal loans, credit card debts, and the like.
2. If the debt to be negotiated is business-related, you need to be the entity’s sole proprietor, and the debt should be only in your name.
3. You are currently facing difficulty meeting your recurring payments, or you are already in arrears.
4. Your existing debt stems from business insolvency, job loss, or the accumulation of personal debt to finance the enterprise.
You Do Not Need to Go It Alone
Countless small business owners have found themselves in the position of having to use credit cards or other modes of financing to maintain their enterprise as a going concern. Running into trouble after making that decision, however, is also quite common, and that is why debt settlement firms provide the type of relief entrepreneurs need.
When cutting back on business spending, attempting to boost revenue by raising prices, or utilizing any number of other methods of righting the ship have failed, it may be time to turn to a team of professional negotiators who can work with creditors on your behalf.
If you are among those whose debt load has become unmanageable, there is no need to shoulder the worry alone. Debt relief companies can be invaluable resources in the quest to get back on solid financial footing and move forward in business and in life.