Business Debt Settlement Guide

In order to settle a debt, you are required to convince your creditor to accept less than what you actually owe. Prior to that actually happening, there are several requirements that debtors have to meet.

If you are concerned about missing a payment but have not yet defaulted, you may not enter into debt settlement talks. If there is no reason to believe that you cannot pay the full amount, the creditor is not going to accept any less.

Debt settlement becomes an option only when you have many late or skipped payments and even have accumulated collections accounts and you feel like you have absolutely no way out.  It is clear that given your current income, you are unable to fulfill this obligation.

As you consider debt settlement, beware that it won’t completely halt collection notices, late fees and threats of possibly being sued.

How Does Debt Settlement Work?

The ultimate aim of debt settlement is to reduce what you owe. Debt that may be reduced are mostly unsecured debt. Secured debt such as a mortgage or a car loan may be foreclosed on or repossessed and it not permitted for debt settlement.

Generally, a settlement offer will only be accepted if the only alternative is to not pay anything at all. There are three ways in which you can go about initiating debt settlement talks:

Do it Yourself

It doesn’t hurt to reach out to your creditors once you have fallen significantly behind. Often times,banks have hardship programs that may be able to provide some assistance. Be certain you are able to afford any reduced payment options your lender may offer.

If you want to attempt negotiating a settlement yourself, it is important to conduct extensive research. You may want to garner as much funds as you can to make in order to make a reasonable lump-sum offer. What the creditor will actually accept depends on the severity of your hardship.

Debt Settlement Companies

Debt settlement agencies will require you to pay them instead of your creditors. When the company ascertains that there is enough for a settlement to be reached, they will negotiate on your behalf. According to the law, debt settlement agencies are not permitted to charge you an upfront fee and usually take a percentage of the debt eliminated by the settlement.

Hiring a Debt Settlement Lawyer

Although most people opt to go with debt settlement agencies, depending on the severity of your case, you might want to inquire about hiring the services of an experienced debt settlement lawyer, particularly if you have been sued, signed a Confession of Judgment or a Personal Guarantee. Also, keep in mind that creditors are more likely to take negotiations more seriously if you have legal counsel.

The attorneys at ZocLaw.com have helped many businesses with the debt settlement efforts. Schedule your free initial consultation today.

 

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