When you started your business, you likely had to use credit cards to get things going. If you did, you are not alone. In fact, 25% of entrepreneurs used at least one credit card to start their business. Yet whether you used a credit card or obtained a loan, the fact is you had debt that needed to be paid back. While this is no problem when things are going great for your business, an unexpected downturn such as what has taken place during the COVID-19 pandemic can turn your finances upside down. As a result, you may find it harder or even impossible to pay back what you owe. When this occurs, you may be able to try what is known as debt settlement rather than file for bankruptcy or sell your business.
What is Debt Settlement?
When you decide to pursue debt settlement, this means you will probably hire a debt settlement company to help you negotiate with your creditors to reach a solution to your debt problems. When you do, the goal of these negotiations is to get your creditors to settle with you for an amount that is much less than what you currently owe. Surprisingly, most creditors are far more open to this idea than many business owners realize.
What are the Advantages of Debt Settlement?
When you hire a debt settlement company to help reduce or eliminate your existing debt, there are several advantages to choosing this process. To begin with, you will not be responsible for handling all negotiations with your creditors, which can be time-consuming, frustrating, and intimidating if you have no experience in this area. Along with this, you’ll have professional negotiators working on your behalf, which will let your creditors know they will need to deal in good faith to get the results they seek.
When Will I be Debt-Free?
While choosing to work with a debt settlement company will not mean your debts are erased overnight, it will mean you will be out of debt much faster than if you had stayed on your present course. For most entrepreneurs who enter into an agreement with a debt settlement company, they are usually debt-free within two to four years. This will be much better than if you had chosen to continue making the minimum monthly payments on your credit cards, which if done can keep you in debt potentially forever.
The Basic Steps
Once you decide to find out more about debt settlement, your first step is to fill out an online form from your company of choice to see if you qualify. If you do, you can then expect to be contacted by a company representative who explains the process and asks if you want to enroll. Once you do, you will then be required to accumulate money in a savings account that is owned by you and is FDIC-protected. After you have the necessary amount of money in your account, the debt settlement company will enter into negotiations with your creditors to reach settlements. When agreements are reached, you are contacted by the company to get your approval and arrange for payment of the debt.
Do Debt Settlement Companies Charge a Fee?
Yes. In most situations, the debt settlement company will charge you a fee ranging from 15-25% of the total debt you owe to creditors. However, it is important to remember any fees can only be charged to you after a settlement has been reached and you have agreed to the terms associated with the settlement. While you may be concerned the fees may be too high, most business owners still save substantially more than if they had chosen to pay the full amount of their debt.
How Can Business Owners Qualify for this Help?
If you are a business owner who realizes you need outside help to pay off your debts, you will still have to meet certain criteria to qualify for help from a debt settlement company. For example, you will need to have at least $7,500 of unsecured debt from credit cards, a personal loan, or other types of debt that are not linked to collateral. In addition, you are required to be a sole proprietor and have the debt be in your name only. Finally, the debt will need to have been acquired due to a specific financial hardship, which can include a job loss, insolvency of your business, or other related difficulties.
What Types of Debt Won’t Qualify for Debt Settlement Services?
Contrary to what some people think, not all debt will qualify for help from a debt settlement company. As to what debts will not qualify for assistance, these include secured debts such as mortgages or car loans, tax debts, or student loan debt. If you have incurred these debts, you will need to explore other options to ensure you can get these debts paid off in their entirety.
Seek Out Professional Assistance
Since you have put in plenty of time and money to make your business a success, don’t let debt problems derail your plans of being a successful business owner. Since almost all entrepreneurs take on debt when starting their businesses, you are not alone should you face financial difficulties. By contacting a reputable debt settlement company today and having experienced, knowledgeable, and certified Debt Consultants negotiating with creditors on your behalf, you can experience a positive financial turnaround.
As a business owner, your primary goal is to succeed. And, you can do anything to achieve success, including acquiring a loan to fund your business. The loan you receive will enable you to procure stock and pay for different services that will allow your business to operate better. If your business prospers after obtaining the loan, you will manage to pay back the loan without difficulties. However, if your company continued to struggle even after using credit money to boost it, you will be worried about how you will pay back the loan.
If you get to that point, you might consider filing for bankruptcy. But that is not the best decision. It would help if you only resulted in that after all the other debt management strategies have failed. For proper debt management, follow the following steps.
How You Can Handle Your Debt
The following are some of the best steps that can help you manage your debt.
1. Assess Your Debt
To know how dire your debt situation is, compare your income and your monthly debt payment. If what you pay is higher than your income, you need to change your spending habits.
2. Change Your Spending Habits
You have to change your spending habits if you want to manage your excessive debt. Start by evaluating your budget to reduce or slash the nonessential items. Then, reduce your number of employees if you have several of them working in one department.
You can also change your suppliers and buy your goods from those that have lower prices. Lastly, look for ways to save on energy consumption, which will significantly bring down your monthly energy bill.
3. Consider Debt Settlement
If you try the two debt management strategies above, and are still struggling with your debts, consider debt settlement. That might be the best solution for your debt problems, and it might bring them to an end, enabling you to continue with your business operations without difficulty.
Debt management will enable you to save money and get out of your current financial situation within 24-48 months. Do you want to know how you can benefit from this strategy? Read through to find out.
What is Debt Settlement?
Debt settlement is a procedure that enables you to negotiate for a lesser settlement with your creditors. You can either deal with them yourself or hire a professional company to help you with the negotiations. With proper negotiations, your creditor will be willing to accept a lower payment on the loan you had acquired.
The process of negotiating with creditors is challenging. That’s why you should hire a professional debt settlement company to deal with your creditor on your behalf. Professional debt settlement companies have skilled negotiators that have been in the industry for many years. With their debt negotiation skills, the professional negotiators will expertly negotiate to get you a better plan to reduce the amount of time and money you need to pay for the debt payment.
What You Need to Know About Debt Settlement
Before a debt settlement company accepts to work with you, they might request you to fill out an online form. The details you fill out will enable the firm to know whether you are eligible. If you qualify, a representative of the firm will contact you to give you the details of the agreement to confirm whether you know their service’s terms and conditions. If you are not conversant with their terms, they will take you through the following details to make an informed decision.
The debt settlement firm will expect you to have a FICD- insured account where you will be depositing money monthly. They will set a target you have to meet before the firm proceeds with the negotiations. Only after your account has the money the firm requires will they start the negotiations with your creditors.
After you have deposited enough money, the debt collection firm will contact your creditors for negotiations. And, if the talks are successful, the debt settlement company will contact you for approval. After you approve the deal, the debt settlement firm will settle all the debts on all your accounts, and you will no longer have to worry about your debt.
The debt collection company will probably charge you 15-25% of your debt on their services. However, you should only pay them after they have successfully negotiated on your behalf with your creditor and you have agreed to the deal. You might think that their charges are high, but this is the best debt relief plan if your business is struggling and you have debts to pay.
How Do You Qualify for Debt Settlement?
To know whether you qualify for the debt settlement program, request a debt evaluation form from a professional debt settlement company. To qualify, you need to have a minimum of $7500 in unsecured debt. The debts include credit cards, personal loans, or any other debts that you have not acquired using any of your items. If you are using your business as collateral, the company should be in your name, and you should be the sole proprietor.
Also, you have to prove that your accrued debt is a result of financial hardships, business challenges, or a loan you took to boost your business. And, you have been struggling to repay the loan you took, or you have gone for months or years without making your monthly loan repayment.
If you’re struggling with your debt, that does not have to be the end of your business. With a professional debt settlement company, you can manage to reduce your debt and manage to pay it within a short period. That will enable you to resume your normal business operations without worrying that your debts will kill your business dream.