It is very common for startups and small businesses to take on and rely on loans for funding their business and to carry on their day to day operation. If you want to meet with all the obligations of your small business efficiently, you may too have to take on some debt. However, if you are not very careful and considerate about the amount of debt to take on and the have enough resources to repay them back on time, you may soon find your business failing due to too much debt pressure.
Proper management of business finances and timely repayment of the loans are both very crucial. Usually problems arise when you have to send the major share of your available cash for debt payments thereby leaving you with little or no money for other operations of your business.
In such a situation a proper debt relief in the form of debt settlement or debt consolidation may bring your ailing and failing business back to life and on the right track. For this you will need to hire the service of a reliable and reputable debt settlement company and also know the ways in which you can separate the good one from the bad, given the fact that there are so many of them out there and all are not created equal.
Add to that, there are several strategies to employ that will make the entire process of settling your debts easy, smooth and productive.
Ways to settle debts
There are usually lots of ways in which a small business can settle debts and bring things back to life. However, going by the debt settlement feedback it seems to be most advantageous and popular.
- Simply put, debt settlement is a process in which you negotiate with your creditors so as to reach an agreement where they will forgo a significant amount of the outstanding balance you owe to them. For this you will need to put forth a very practical and more reasonable repayment plan.
- The credit card companies often offer debt settlement schemes in which they recover a part of the total amount outstanding if they feel that there is a situation of losing the entire amount if you plan for filing bankruptcy.
- Therefore, if you are in a dire debt situation then it is best to negotiate with your lenders to write off your debts anywhere from 40% to 70% of the total amount outstanding depending on their business policy of course.
However, this approach needs to be done precisely and perfectly which is why it is smart to take help of a professional and expert debt management consultant or advisor. Also make sure that you check for the debt settlement reviews of to identify who offers the best services in this regards.
When you choose a debt management company do not give in to their suggestions to consider bankruptcy. They do so because they do not want to face the challenges of debt management. However, bankruptcy will surely ruin your reputation as a business owner as it will also remain in your credit report for about a decade.
That means you will find it difficult to avail fresh loans in the future or any other lines of credit if you file for a bankruptcy. What is more surprising, even after this period, you will have to mention explicitly the history of your bankruptcy in every loan application that you make or even want to have a credit card.
That means debt settlement is one of the best options available to businesses that wants to get rid of their debts and avoid the negative values of bankruptcy. You may argue at this point that even debt settlement will also remain on your record for about seven years but the difference is that after that period there will be no public record left in your credit history.
It is through proper debt settlement only that a business can get rid of their debts within a period of 2 to 4 years. As for all other available options, even debt consolidation will take a much longer time than that.
However, the process is a bit challenging because it is very difficult to make the creditors agree to accept a lower amount and waive off the rest. It is here that you will feel the need for skilled and experienced negotiator acting on your behalf to discuss it with the creditors and develop an idyllicdebt settlement plan.
Whom to choose
Now that you are sure that debt settlement is the most suitable option for your business it is time to focus on selecting the right person to work with. It can be a person or a company but ideally the selection process remains the same. Stay clear for those who charge exorbitant fees and yet fail to provide the results that you need. For this you will have to look at different factors apart from the fees to choose the right debt settlement company.
These factors will ensure that you work with a legitimate, well-established, trustworthy and successful debt settlement firm that has a proven track record, offer high quality services and charge you a fee that will fit in your already ailing budget. The things to look for include:
- Years of experience: Go for one that has been in operation for years and has a strong market reputation.
- End-to-end service: Choose a company that will walk with you through the entire process and work for the best of your interests.
- No up-front fees: According to the FTC rule 2010 a debt settlement firm should not charge you fees until the debt is settled.
- No hidden fees: A well-established and highly reputable debt settlement company will be explicit with their fees and be transparent. They will not charge any hidden fees such as signing fees or administration fees.
If you take some time to research it will save a lot of money and headaches for you down the line.
Author Bio: Marina Thomas is a marketing and communication expert. She also serves as a content developer with many years of experience. She has previously covered an extensive range of topics in her posts, including money saving, Budgeting, business debt consolidation, business and start-ups.