Business Debt Resolution
Businesses sometimes require debt relief. The business environment is unpredictable, and no matter how well-prepared businesses are, mishaps happen. If debt is piling up, it’s good to know that business owners have options available to help. These debt relief choices are available for small business.
The primary navigation of a business debt relief program is to help small business owners manage, reduce, or eliminate their debt. A small business owner needs to understand the full range of debt relief options available, particularly those that can be pursued before resorting to more drastic debt measures like Chapter 7, Chapter 11, and Chapter 13 bankruptcy filings.
How We Can Help
Debt is a common part of running a business, but when it becomes overwhelming, it can threaten your company's stability. That’s where business debt resolution comes in—a process designed to help businesses regain control of their finances by negotiating better terms with creditors or settling debts.
What Is Business Debt Resolution?
Business debt resolution is the process of working with creditors to reduce the total amount owed or renegotiate payment terms. Unlike debt consolidation, which combines multiple debts into a single loan, debt resolution focuses on settling existing debts, often for less than the original amount.
Key Features of Debt Resolution
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Focus on Reduction: Aims to lower the total amount owed.
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Negotiation with Creditors: Works directly with creditors to achieve better terms.
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Custom Plans: Tailored to a business’s unique financial situation.
How Does It Work?
Debt resolution typically involves partnering with a debt relief specialist who manages the negotiation process. Here’s how it works:
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Financial Assessment:
The process begins with a deep dive into your business’s financial health, including cash flow, debts, and obligations. -
Negotiation with Creditors:
A debt specialist negotiates with creditors to reduce the total amount owed, adjust interest rates, or extend repayment terms. -
Debt Settlement Agreement:
Once an agreement is reached, payments are made according to the new terms. -
Business Recovery:
With reduced debt, businesses can focus on rebuilding financial stability and growth.
Bankruptcy Options
When other debt-relief options are not sufficient, businesses may consider bankruptcy. There are three types of bankruptcy options.
Chapter 7 Bankruptcy
Chapter 7 involves liquidating the business's assets to pay off debts. This often leads to the closure of the business.
Chapter 7 bankruptcy, also known as "liquidation bankruptcy", involves the sale of a business's non-exempt assets to pay off creditors. This process is overseen by a court-appointed trustee who collects and sells the assets, then distributes the proceeds to creditors.
Once the assets are liquidated and the proceeds distributed, any remaining unsecured debt is typically discharged, meaning the business is no longer obligated to pay it. Chapter 7 is usually considered when a business has no viable future and needs to close down.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy, often referred to as "reorganization bankruptcy," allows a business to restructure its debts. Specifically, it lets businesses reorganize their debts and continue operating under a court-approved plan.
Under Chapter 11, the business proposes a reorganization plan to keep the business alive and pay creditors over time. The plan might involve downsizing the business operations, renegotiating debts, or liquidating some assets to generate funds.
This type of bankruptcy is generally used by larger businesses but can also be an option for small businesses looking to restructure rather than liquidate.
Chapter 13 Bankruptcy
Chapter 13 is usually reserved for sole proprietorships. It allows for the reorganization of debt under a repayment plan while the business continues to operate.
Chapter 13 involves creating a repayment plan to pay off all or part of the debt over a period of three to five years. The debtor makes regular payments to a trustee, who then distributes the funds to creditors according to the approved plan.
This type of bankruptcy allows business owners to keep their assets and continue running their business while working on repaying their loans or other debt.
Debt Settlement for Businesses
Just like debt settlement for individuals, businesses can enroll in a debt settlement program. Debt settlement for businesses involves negotiating with creditors to reduce the total amount of debt owed, often resulting in a reduction of the balance owed which could be paid in installments or as a lump sum.
This strategy can provide financial relief for businesses struggling to adhere to strict debt obligations. Through a reputable debt settlement professional, business owners can reach an agreement with creditors to possibly reduce debt balances, improve cash flow, and potentially avoid more drastic measures like bankruptcy.
Debt settlement can negatively impact the business's credit worthiness and may involve fees. However, it’s a far gentler approach than filing for any type of bankruptcy. It also gives you space and time to rebuild your business credit score and recover from a professional or personal credit misfortune.
Schedule an Appointment
Businesses have several options when it comes to business debt relief, aside from filing for bankruptcy.
A professional debt relief company can present all the available information and provide a strategic approach to managing financial obligations to grow your business.
Debt restructuring, business loans, consolidation, debt management plans, and professional counseling are some alternatives available to help business owners manage their debt burdens. If these measures prove insufficient or beyond reach, bankruptcy may be a legal avenue for resolving insurmountable debt, albeit with significant consequences.
Each business is unique. Whether you are exploring a business loans, seeking advice on your current financial position, or just looking to stay updated with the latest news in financial management, with Freedom Law Group’s specialists you will receive the support you need.
Business owners interested in debt relief should schedule an appointment with a Freedom Law Group Certified Debt Specialist today at 123-456-7890. They will get a free savings estimate along with the full picture of their financial options so that they can select the one that best matches their long-term goals.