When you took out a credit card to fund your business and get it off the ground, you knew there would be thousands of dollars of debt that would need to be paid off as your business grew. However, you never could have imagined something such as the coronavirus pandemic would come along and have you closing your business for weeks or months at a time. As a result, what seemed like debt that would be easy to pay off has instead become a quagmire of minimum monthly payments leading nowhere. If you are at your wit’s end as to how to reverse this trend, you may want to consider enrolling with a debt settlement company.
Creditors are Open to Negotiations
Much to the surprise of many business owners who find themselves struggling to pay off debt, most of their creditors are always willing to listen to a potential deal that would get the debt paid off. However, their ears are usually a bit more open if the deal is coming to them from an experienced debt negotiator from a debt settlement company. Once creditors are contacted by a negotiator, they realize you are determined to keep your business open and want to get your debt problem taken care of as fast as possible. Sine creditors are in the business of getting whatever money they can in these situations, they will likely agree to a settlement amount that is much below what you actually owe.
When you took out credit cards or personal loans to fund your business, these are known as unsecured debts, all of which qualify for debt settlement services. However, if you have fallen behind on tax payments for your business and now have tax debt with the IRS, this will not be able to be handled by debt settlement negotiators. In addition, other secured debts such as loans obtained on vehicles, mortgages, or student loans will also not be eligible for this unique type of assistance.
A Faster Solution to the Problem
Once you get into the cycle of being able to do nothing more than make minimum monthly payments on credit cards, you feel as if you are simply throwing away your money each month. However, that won’t be the case if you qualify for debt settlement services. Since negotiators will get creditors to agree to accept amounts that are much less than what you currently owe, you now have the ability to reduce your debt much quicker than you expected. If everything goes as planned, it is possible most if not all of your business debt could be wiped clean within less than five years, and in some cases as soon as 24 months.
Settle or Continue Negotiating?
When a negotiator reaches a deal with one of your creditors, you will be contacted to discuss the terms and how much you would be expected to pay. In most cases, the deal reached is fair and likely should be given serious consideration. However, if you do not like certain parts of the settlement, you can express your concerns to your negotiator and have them continue trying to reach a better deal. While creditors will probably still be willing to talk and even change their original offer, some may stand firm on the first offer. Therefore, work closely with your debt settlement negotiator to ensure the process does not drag on unnecessarily, resulting in you losing out on a chance to pay off a creditor.
Debt Settlement Fees
Since the debt settlement company will be providing you with a valuable service, it will charge you a fee to negotiate settlements on your various accounts. With most of these companies, the fees may be relatively low, such as 15% of your total debt amount. For other companies, the fee may reach 25% of your total debt. In either case, it is a much better deal for you and your business than if you continued to struggle along with no clear end in sight.
Payments to Creditors
Once you have enrolled with a debt settlement company, your first step will be to have a savings accounts opened up that is protected by FDIC rules and regulations. This account, which will be used exclusively to make payments to your creditors, will need to be opened up immediately, and you will need to start making monthly deposits into it until you have accumulated enough money to let the debt settlement company begin negotiating with your creditors. Therefore, it is best if you open this account with your own bank or another lender with whom you feel comfortable.
You Are Not the Only One
Sometimes when you are a business owner who has started to encounter financial difficulties, you mistakenly think you are the only one whose business is struggling. However, you know logically this is not the case at all. In fact, surveys have shown that between 25-30% of small business owners used credit cards to start their businesses. Therefore, don’t choose to continue with minimum payments or consider filing for bankruptcy when you still have the option of debt settlement. By working closely with company negotiators and being determined to see your debt disappear, you may find the solution to your problem was much easier than anticipated. To begin the process, go online to see if you qualify, and then discuss your situation in-depth with company representatives.