Businesses just like individuals often suffer from excessive debt issues. Taking the correct amount of debt and that too at the perfect time could make all the difference between a successful business and a business that is struggling to make it.
As per the United States Small Business Administration (SBA), approximately 50% of all the small businesses actually fail within the initial five years, primarily because of lack of sufficient capital, excessive debt, or poor credit arrangements.
For the majority of the small businesses, it makes sense to borrow money when it becomes essential to consider bolstering cash flow or financing expansion or growth. However, because of the Great Recession, it has been really tough for small businesses over the past few years or so.
Particularly, for those organizations that overextended themselves by mindlessly borrowing excessive money without having the ability to pay back the amount they actually owe, as per the observation of debt organization.
What Do You Understand by Debt Settlement
A debt settlement firm actually negotiates with the creditors on behalf of you or your business. When you choose debt settlement, you would at once start diverting some funds to some special account that has been set up by the debt settlement firm hired by you.
Once the amount deposited reaches a specific level, the debt settlement company would be trying to communicate with all your creditors and try to convince them to accept the lump sum that the debtor can afford currently.
The lump sum offered would certainly be much lower than the amount you actually owe. Once the creditors accept the lump sum which is definitely much less as compared to the amount owed by you, you would cease to be any further indebted to the creditors.
The exact amount of time taken to settle the debts depends solely on how fast you could save enough for initiating the negotiation process. However, most debt settlement companies would be taking two to almost four years for settling the debts.
Debt Settlement Benefits for a Small Business Owner
We realize that debt settlement involves negotiating with all your creditors and convincing them to forgive a chunk of your outstanding debt amount.
We know that many credit card companies are too happy to choose debt settlement for recovering at least some part of the outstanding debt once they realize there is a greater possibility of losing the total amount due if the borrower actually opts for bankruptcy.
If you are a small business owner and drowning in debt, you could smartly negotiate somewhere between 30 percent and 70 percent of the total outstanding debt amount.
Small business owners are often compelled to opt for bankruptcy when they are trapped in never-ending business debts. Excessive business debt often culminates in bankruptcy.
You know that bankruptcy would be ruining your life completely since the entry would be very much present in your credit profile for a decade at least.
You would face tremendous difficulties while processing any new loans. More often than not, with a background of bankruptcy, you would be refused a loan request.
Your creditors would obviously, ask you if you ever filed for bankruptcy. If you try to act smart and deny the truth, you would be caught sooner or later for telling lies and presenting false facts. You would be regarded as a fraud and in many cases; you could lose your job.
We now appreciate the fact that debt settlement is certainly the best way of eliminating debt without thinking in terms of bankruptcy. The credit report would have a debt settlement entry just for seven years and no evidence or any public records would be found after these 7 years.
Alternatively, you may browse through various debt settlement reviews online to learn more and achieve perfect solutions.
Relief from Overwhelming Debts
Your aim is predominantly to pay just a portion of your entire debt to your creditors while settling your debts. You must not allow your debts on the credit card to get accumulated expecting it to be settled someday.
You should choose debt settlement in genuine situations when in reality; you are going through a huge financial hardship and having issues in paying back your entire debt amount. You must necessarily choose debt settlement as the most reliable and convenient way of getting rid of overwhelming debts.
Debt settlement would be involving far less processing time if you obtain a good debt settlement plan. If you have ultimately opted for debt settlement, it is best to hire the services of a professional debt settlement company for perfect and prompt professional solutions.
However, as with all other debt solutions, it is essential to weigh the pros and cons of a debt settlement plan and continue convincing the creditors or the financial institution concerned so that they go ahead and accept your offer.
Factors to Consider While Choosing a Debt Settlement Company
You need to be 100 percent sure about the authenticity and the competence of your debt settlement company. Here are some factors to consider while choosing a debt settlement company.
- Accreditation: The top debt settlement companies seem to be definitely accredited by reputed organizations and that may include the AFCC ‘American Fair Credit Council’, IAPDA (the ‘International Association of Professional Debt Arbitrators’, and the BBB (Better Business Bureau).
- Longevity: Companies that are having a reasonable experience and have been in this business longer would be less inclined to or having less incentive to associate themselves with some shady or spammy business practices.
- Easy Availability of Customer Support: You should be easily able to contact customer support executives whenever you want via email or phone. Another effective option is online chat. You must have access to free consultations from the customer care executives and top companies assign a program manager for individual clients so that they operate as your advocate once you sign up.
Before you decide to employ the services of a particular debt settlement company, it is best to gather maximum knowledge about debt settlement and understand the repercussions. You must do a thorough background check of the debt settlement company.
You must read carefully the fine print in the debt settlement agreement and only if you are fully convinced, go ahead with determination and confidence.