When debts spiral out of control, they can sink a small business once and forever. Since it is common for start-ups and small businesses to rely on loans for funding their business, proper management of finances and timely repayment of the loans are also crucial. Problems arise when debt payments get the lion’s share of the revenues, leaving little to no money for carrying out business operations.
If you are in a similar situation where you are struggling to pay off your debts, maybe you should start thinking about debt settlement. There are many strategies that you can employ to make the process of settling debts easy and smooth. Let’s discuss what the process entails.
5 Ways Small Business Debt Settlements Will Bring Your Ailing Business Back to Life
Advantages of debt settlement
Simply put, debt settlement is the process of negotiating with the creditors to reach an agreement where they forgo a significant portion of the money you owe to them if you put forth a more practical repayment plan. Credit card companies offer debt settlement schemes to recover a part of the outstanding debt if there is a situation of losing the entire amount if the borrower is planning to file bankruptcy.
If you are at a cumbersome debt situation, then you can smartly negotiate with the lenders to write off anywhere from 40 to 70% of the outstanding debt to make a settlement. However, this needs to be done perfectly, and it is ideal to take the services of a professional and expert debt management consultant or advisor. Check for the debt settlement reviews ofbusiness owners to identify who offers the best services in debt settlement.
When facing the challenges of debt management, companies often consider bankruptcy. However, bankruptcy may ruin your reputation and remain on your credit report for about a decade. You may find it difficult to get other fresh loans or other lines of credit after a bankruptcy. Even after this period, you may have to explicitly mention the history of bankruptcy while applying for new loans or credit cards.
Debt settlement is one of the best options that businesses can think of to get rid of the debts and avoid the negative consequences of bankruptcy. Debt settlement will also remain on your record for about seven years. However, after this period there will not be any public record left.
Through proper debt management, it may take 2 to 4 years for you to repay your debts even if you are getting into an ideal debt settlement plan. However, the process may be challenging as it is difficult to make the creditors agree to your settlement terms. Here comes the importance of a skilled negotiator who can act on your behalf to discuss it with the creditors and devise an ideal settlement plan.