Understanding what happens when you default on a business loan is the key to creating a game plan. If you default on an unsecured loan, it does not mean that the creditor lacks the resources to collect from you. An unsecured loan is a loan that is not secured by specific collateral, whereas a secured loan is one that is secured by collateral for example a mortgage loan for the purchase of real estate for use by the company.
What you need to consider when it comes to unsecured loans is that while a creditor lacks collateral, he or she may still sue your business to collect. In these circumstances, the creditors is allowed to seek compensation for the balance of the loan, as well as for interest, penalties, fees and costs.
How Does Judgment Collection Work?
When you default on an unsecured loan, and a creditor sues and obtains a judgment against your business, there are numerous ways in which the creditor may collect on the judgment. One way is that the creditor may garnish the bank accounts of the business. Another method is that a creditor may place a lien on real estate owned by your business or on automobiles titled in the name of your business.
What Is The Time Frame?
A collection case filed against your company may be finalized quite quickly. It takes only about a few months for a creditor to obtain a judgment against your budget, and may commence collection activities directly after receiving that order from the court.
What Happens When You Default On A Business Loan If You Co-signed?
A creditor, often requires the owner of the business to co-sign a loan with the business. In this case, the creditor may, apart from going after the business for the repayment of the loan, but may also come after you personally. The creditor may obtain a garnishment of your personal accounts and liens on your personal real estate or automobiles in such circumstances.
Do I Require Expert Assistance?
In the event that your business defaults on an unsecured loan, especially one for which you co-signed as an individual, it may be wise to appoint the services of a great business debt attorney who will be able to advise as to what happens when you default on a business loan. As legal practitioners are well trained in this field, your business, and potentially your personal interests, are best protected by an attorney. A knowledgeable and well trained attorney will be able to negotiate with your creditors to allow you to settle the loan for far less than what is actually owed. Although you may also negotiate with creditors, creditors respect attorneys more as they know they mean business. Further, attorney’s understand what makes creditors tick, and will be able to get the best deal for you. Thus, if you try to negotiate with your creditors on your own, the chances are that you will not get the same results than if you allowed an attorney to do so on your behalf. The last thing you would need is for your situation to get worse, and you as a business owner have more important things to deal with than to negotiate with creditors, thus you rather leave it to an attorney who is an expert in the field of debt very much like the attorneys at ZocLaw.com.