Are you about to file for bankruptcy? You do not have to. We know starting and running a business without debt can be very hard. Taking a loan or any form of debt to push your business is not such a bad thing. Most entrepreneurs do not have the luxury of having all the cash they need to run their business, so they end up in debt. That is still okay. Debt is not as bad as it looks because there are a few ways you can handle it before filing for bankruptcy. One of the remedies is to consider working with a debt settlement company. Below we discuss how to navigate the process.
What is Debt Settlement?
It is a process where you, as the debtor, contracts a debt settlement company to negotiate with your creditors. The settlement company negotiates with your creditors to take a smaller amount of money than you would have paid in full. I know you are wondering how that is possible but let me break it down for you. Banks and other money lending facilities such as credit card companies can accept less than you were required to pay. It would be best to have somebody who has great negotiation skills to represent you or do it yourself.
Most debtors will choose to contact a third party to do it. It is much easier as it saves you time that you can put into your business. It also gives you confidence that you are handled by the best who know how to do it.
The Debt Settlement Process
Once you decide to contact a debt settlement company, you can reach out to them. They will guide you on how to register for their services and tell you more about their terms. The terms are almost the same for most of these companies. Once you have an agreement with them, the process requires that you open an insured saving account that you are in charge of. You discuss an amount that should be deposited into the account every month. The amount is determined by the amount of debt you have, plus how much you can afford.
Once you start saving with the settlement company, you cease making payments with creditors. It will lead to your debt accruing more interest debt, which is a good thing in disguise. You will see why it is in a moment. Once you reach the set amount on your savings account, the settlement company now begins negotiations with the creditors. They do their best to convince them to take a much small amount from you and clear the debt. The creditors are likely to accept in most cases because they would instead get a smaller amount than not get any at all. Now, do you see why it could be a good thing?
Once they reach an agreement, they decide on the payment structure. It could be on installment or with a lump sum. The settlement company then contacts you for approval. Once they clear your debt, you are entirely free from that. After this, you pay the settlement company at a rate that you had agreed on initially. See how easy that was?
Here is How to Know if You Qualify for Debt Settlement
Some loans do not qualify for debt settlement. To know if you qualify, you can request a free debt evaluation from the settlement company. It will update you on if you are eligible as the business owner and, if so, what the terms would be. Most secured loans, those that have collateral, do not qualify for debt settlement. These could be car loans, mortgages, and tax loans. These you need to pay in full. There are still a few terms that could qualify your business for debt settlement; among them are:
In case you have over $10,000 in unsecured loans such as credit cards or personal loans. Unsecured loans do not have collateral. Collateral refers to what can stand in place of that amount if you were not capable of paying. In case your business is having a hard time paying the debt or is behind schedule in terms of payment.Your only qualify for debt settlement as a business if you are the sole proprietor of the business. The debt has to read your name only.
In case you fell into debt because of unavoidable financial constraints. It could be a job loss, business failure, or even falling into debt to sustain your business. Those are some of the factors that could qualify your business for debt settlement, but it would be wise to consult a professional to evaluate your case.
How to Choose a Debt Settlement Company
With it being a delicate issue that involves money, you need assurance they are the best for the job. You should be handled as an individual because different clients have different problems. The settlement company should give you a specific person to handle your case. Their personnel should make sure they understand your case to avoid any form of error. The company should not give you any false promises that are unreasonable and unattainable to impress.
A company that has its in-house counsel is the best. Creditors might think to sue you for payment failure, so you need an attorney familiar with such cases. The company needs to table their charges before you begin working together. The settlement agreement is interest-free, so you should not incur extra maintenance fees.