Business debt negotiation as an alternative to bankruptcy – A light at the end of the tunnel
Filing commercial bankruptcy is a lose-lose decision both for a business and its creditors.. Instead of creditors living in fear that they will get nothing and companies having to close their doors, there is another way to go. What is in everybody’s interest is a corporate debt settlement or negotiation program that reduces the total debt obligation of the business, or creates doable repayment plans, that insure the survival of the company in the long run. Business debt can cause overwhelming fiscal difficulties and place a business firm in extreme jeopardy. Corporate debt restructuring through a debt negotiation company is a productive solution to eliminate the financial woes and enhance liquidity by establishing equitable distribution among creditors and freeing up the business to realize its goals by lifting the burden of debt.
Comprehending the process of commercial debt settlement
Before a business owner or manager takes a plunge into the debt settlement bandwagon, it is important to understand how the process works. When a business starts a debt settlement program, it will actually have the opportunity to negotiate with creditors in order to present the financial hardship and persuade creditors about an alternative debt repayment structure to facilitate the repayment process. The best part of the negotiation is that the business does not require doing it on its own. Since it has enrolled with the professional debt negotiation company, the business debt consultant will do all the formalities on its behalf.
The professional will make a list of the debts owed by the business, categorize them according to the total principal balance, interest, penalties, and accrued fees. Based upon the cash flow of the business, the professional debt negotiation company will create a feasible plan to repay the debt and then negotiate with each of the creditors to either reduce the debt, obtain a comfortable installment arrangement to pay the debt over time, and even reduce the debt and obtain comfortable installment terms. The creditors usually agree to the professional’s proposals as the impending threat of losing the entire balance if the business firm were to declare bankruptcy is what motivates them to listen patiently to the requests of the professionals.
The obvious benefits of settling commercial debts through a professional company
The debt settlement programs of the trustworthy companies implement a proven methodology of savings and negotiation that enable them to resolve business debt quickly and cost-effectively. As business bankruptcy often takes a toll on the business by laying off employees and wiping out the owner’s investment, an alternative program helps breathe a sigh of relief. Here are some benefits of settling debts through a debt negotiation company.
- Help compensate the creditors in accordance with what your business firm can afford
- Reduce the total outstanding debt and/or stretch the repayment period into fixed, affordable and single monthly payments
- Spend less time dealing with the stress of hungry creditors and the harassing debt collection agents
- Keep the doors open and rejuvenate the business
- Spend more time in optimizing the business and creating revenue by concentrating on the future and not the past
- Avoid redundant and excessive legal fees
- Preserve the relationship with vendors and also keep the supply lines open
- Maintain a balance between budget, revenue and investment and get a manageable grip on cash flow
- Rebuild credibility and credit, and above all
- Avoid filing business bankruptcy
- Do they have published references: Check if the debt negotiation company has been registered with the Better Business Bureau. The BBB is the yardstick of authenticity and it will be rather foolish to work with a firm that is not accredited by the same.
- Do they ask for money upfront: Most unauthentic debt negotiation companies demand upfront fees even before reducing a portion of your total outstanding debt level. The FTC considers this illegal for consumer claims and hence you should avoid working with business debt negotiation companies that charge advance fees at the very beginning.
- Do they ask you to fund settlements before obtaining your consent: Check if the commercial debt consultant asks you to make payments even before receiving your creditor’s consent to the settlement and producing written evidence that a creditor has agreed to the settlement terms.
- Are the fees reasonable in relation to your financial circumstances: A trustworthy debt negotiation company will take into account your present financial state before charging you their fees. You should, therefore, ensure that the fees make sense with your current economic state.
Audric Stevens is a financial expert and a contemporary writer. He is involved in various online activities through which he imparts financial lessons to people with diverse needs. In addition to that, he is closely working with the ‘debtconsolidationcare community’ at the moment that has several interesting and prudent financial tips for people to use. If you like this article please follow us here.