When struggling with overdue debt, you would wonder whether debt settlement is the correct way to handle it. It will be a workable option. It depends on which method you take: settling debt on your own or relying on a third-party debt settlement firm.
The experts say that utilizing a debt settlement company is costly. But, it depends on a firm offering cheap business and company debt negotiation services. A firm that is reliable about the ins and outs to work with the debt settlement.
Negotiating deals on business debt
Assuming that your company can’t pay all the creditors in full, what will be the question to arise? How little to settle for? As you may guess, it will depend on the type of creditor, the attitude of the creditor, and the legal details of the debt.
For example, if the business is a corporation or LLC without any personally guaranteed debts, the creditor knows that it does not have the option to collect from you personally. So, it can be more willing to accept the small portion of what the business owes as full payment. However, if you owe a debt personally, the creditor will have more leverage.
But, no matter what the legal status of the debt, if you can pay 30-70% cash, it is worth trying to settle it. A lot of creditors may agree to settle a company’s debt, knowing that they have a hard time collecting the debt when out of the business. Even if you hire a lawyer to negotiate for you, you can’t deny the fact that a business and company debt negotiation service is what you need.
It makes a lot of sense to tell the creditors your offers are contingent on all the creditors agreeing to settle the debts.
Prioritizing the debts
If the company has pledged an asset as collateral and wants to keep it, pay the debt first. You must pay:
- Loans you are personally liable
- Any benefits and wages owed to employees
Once you have money left, pay the following:
- Credit card companies
- Lease deficiencies
- Bills for random business expenses
Look at how you can handle each type of creditor.
The future claims
If you have any assets or cash left after making settlements with the creditors, you must set aside some money for possible future claims. Habitually, after closing up shop, the creditor comes out of the woodwork. Start to do your best to estimate unpaid bills that any potential lawsuit could be brought against the business.
If your business is a partnership or sole proprietorship, you would want to keep a contingency fund for 3-10 years depending on the statutes of limitation on the state.