Executive Education

Should You Hire A Firm That Offers Professional Business Debt Settlement Service?


Every business has ups and downs, and it always requires a basic investment. Business is all about the investment of both money and hard work. The output may be profit or loss. Only a few people can make a profit the very next moment, and mostly it ends up a loss. Does every single business man out there have back up for his loss?

No, they get money from other business man or banks to fill this space in finance. So, yeah he/she lends some money to neutralize this loss and also for the next investment and again it ends up a loss. Again he/she has to get money from outside to fill this space. Hence it becomes a cycle of decline in business until he/she hits a ‘jackpot’ profit.

How does it work?

A debt settlement company helps the debtor to negotiate a certain percentage of the debts with the creditor and reduces the amount to be paid. Debt settlement is a process of helping the debtor to reduce his debt money. The debt settlement company not only reduces the debt percentage amount but also helps the debtor to plan the financial needs and expense and contributes to keeping the business on track. This helps the debtor to relieve from the creditor and also to clear his consumer credit report.

Who are Debt settlement companies?

The debt settlement company negotiates with the creditor on behalf of the debtor and reduces the amount to be paid to a certain percentage. They also help to get a clear consumer credit report for the debtor. They make efficient and affordable plans to help the debtor with fruitful and effective business. They help out on collection debts, mortgage debts, car loan or personal loan repayment, etc. They have experienced team of financial advisors and attorneys to overcome any problem during the process. There are many debt settlement companies, and they help on almost every debt issues.

Many companies open an account for the creditors known as, ‘special purpose account.’ The debtor is advised to make monthly payments to this account, and once the account reaches a certain amount, the company starts the negotiation process with each creditor. The settlement company deducts a certain sum from each deposit as fees, and this fee is usually specified in the contract and may range from 10-75% of total amount of debt. Creditors Relief is a popular debt settlement firm that has an excellent history and background.

Services provided by Debt settlement companies?

The general service furnished by the companies includes sorting out the total debt amount of the debtor and build a relationship with the creditor businesses to reduce the debt amount. The companies concentrate on reducing the debt amounts to a maximum of 50%. The other services also include providing financial advice to improve the cash flow in the business, saving the business from shut down.

How do they do it?

The business settlement companies build a relationship with the creditor companies, or they use the contacts they have established already with the companies. The debt settlement firms collect the full debt amount from the debtor prior, and once the payment is the default, they negotiate with the creditors. Once the creditor accepts the negotiation, the settlement company pays on behalf of the debtor and settles the debt. Once this is done, they debit the fee for the settlement process from the debtor’s account; the consumer credit report is generated. Once the debts are settled, the company arrange for financial advisors to take care of cash flow in the debtor’s accounts and business. These financial advisors control the usage of money and help to keep business on track. They also provide legal help by assigning attorneys to sort things out during the process of negotiation.

Who are eligible for business settlement?

Not everyone can get business settlement help. The eligibility for such service is restricted to people who:

  • Falling behind with the mortgage payment or credit card
  • Falling behind on the lease payment of equipment
  • Business or Personal bank accounts in the red
  • Using personal assets to secure an advance amount for business
  • Get daily collection calls
  • Failure to meet the crucial obligations of payroll

Some companies help only with card payments and collection payments as it is considered a risk to help with assets mortgage debts. Only a few companies help with mortgage loans too.

When to Negotiate?

When your business is running out or when you are bankrupt, i.e. you have no money to pay all your debts or most of your debts, the creditor may agree to settle your debt for 10-30% of the total debt amount. This is where the debt settlement comes into play and helps you with the negotiation process. This negotiation can also be done individually without any settlement company, but it is not considered safe. This has to be done on a priority basis, and the priority chart is based on the equipment lease, employee’s wages, loans for which the owner is personally liable. It is advised to settle the wages first and then the loans the owner is liable to pay.

Should your approach a debt settlement company?

Even though the debt settlement companies are not considered 100% safe, many people trust these companies to keep their business alive. The business debt settlement is the most important process and the most important part of a business. It is always required to stop and manage a financial crisis. It is always important to keep the cash flow of business on track. Though it is considered bit expensive, every business owner concentrates on such companies to avoid future jeopardy.

The latter help with cash flow also helps them to improve the business. It is always advised to save some extra money after the negotiation process for future use and expense. Such savings make it easy for the business owner to invest it on future business and expense. Contacting the corporate settlement company makes it simple to face tough situations while the experts from the company do the hard part. These companies provide relief from any financial crisis encountered in business.

Written by: Trudy Seeger is a debt consultant. He consulted for Debt among other debt relief organizations.  He has over 5 years’ experience in the financial industry.

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