Debt settlement is an option used by businesses in financial trouble. Debt settlement companies contact creditors and negotiate lower debts. For example, a creditor might allow a business to pay back 50% less than the amount owed. It benefits the creditor because they still get a portion of their money, which is more than they get if the business files for bankruptcy. Payment plans sometimes take a few years to clear debt.
Typically, business debt settlement is the last resort before filing bankruptcy. While debt settlement programs do leave credit badly bruised, the lasting effect is much less than that of bankruptcy. Bankruptcy can stay on your credit report for 10 years and it is public record. Anyone, including customers, neighbors and competitors, will know if you file for bankruptcy. Debt settlement negotiation stays on your credit for 7 years at the most. In some situations a legitimate credit repair firm can get the negative marks removed from your credit report.
Three major benefits of business and credit card debt settlement are:
1. Avoiding bankruptcy
2. Paying no attorney fees to handled owed accounts
3. Using debt negotiation to free up funds
Action Steps
The best contacts and resources to help you get it done
Decide if debt negotiation is right for you
Since debt negotiation is a near last resort, you must decide if your company has exhausted all other options. You may want to consider selling off part of your business or scaling down operations. If you can't achieve this, debt settlement may be the best option.
I recommend: Financial Firebird Corporation provides an online questionnaire to help you decide if debt settlement is the best alternative.
Clear Debt Solution, which provides a debt analysis calculator, contacts you to discuss your results based on the information you provide.
Seek the help of debt settlement services
Debt settlement information is overwhelming; it's best to leave debt negotiation to the professionals. The better the company, the easier clearing your debt will be.
I recommend: American Finasco Incorporated boasts over 30 years of combined debt settlement experience working with businesses of all sizes.
CuraDebt, Inc. sets itself apart from the pack with a team of psychologists, lawyers, financial advisors and credit arbitration experts working on your side.
Rebuild credit after debt negotiation
After debt negotiation, bruised credit haunts businesses. The only thing to do is build it back up again. You can either do this by yourself or seek the help of a respected credit building company. The best way to restore business credit and earn a high credit score is to pay your bills on time. The more positive accounts you have that report to a credit agency, the better.
I recommend: The website
RentREPORTERS helps you build your credit by verifying current rent payments, including commercial rent, and reporting them to the credit bureaus.
Choice Credit Group offers professional help for businesses that need to build positive credit.
Tips & Tactics
Helpful advice for making the most of this Guide
- Some credit repair companies claim big things, but don't deliver. Make sure you receive recommendations or a guarantee before you sign anything. After debt settlement, the last thing you want to do is lose more money.
- Lenders do not always agree to debt settlement, especially in high dollar cases, and may take you to court for the entire balance and all legal costs incurred to collect the debt.
The official source of Debt Settlement is the Debt Settlement page at Business.com
Related Resources from Business.com
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