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    Negotiation of Debt Settlements While Going Out of Business

    Shutting down a business comes with a lot of financial hassles. Most importantly, you need to settle all your debts before you can breathe freely. Once you notify the creditors about the imminent closure of your business, you may want to make plans to pay off the dues as soon as you can.

    On the other hand, if you are forced to shut down the company due to overwhelming debts, the situation may be more complicated. Business owners in similar situations often file for bankruptcy, or they may go for debt settlement options. No matter what your reasons are for terminating your company, here are few tips that you can use when settling the business debts.

    Negotiating over business debts

    You may be able to negotiate different factors such as interest rate on certain loans, repayment terms, duration of repayment and such. However, the outcome may depend on the type debts, creditor policies, and lender's attitude. If yours was an LLC or limited liabilitycompany with debts and without any personal guarantees, lenders already know that they have little options of acquiring the money from you. So they may be more willing to negotiate over the repayment to avoid losing altogether.

    On the other hand, if you owe a personally guaranteed debt or have a friend or family member as the cosigner, creditors have a higher leverage on negotiation. No matter what the legal status of your debt is, if you are capable of paying off 50 to 70 percent of the cash on the barrelhead, you can go ahead and try to settle the debts. As a common practice, many creditors agree to settle on 50, 60, or 70 percent of the amount if they find you are getting out of business and it may be difficult to collect it later.You may check out debt settlement reviews to learn more about the process.

    Planning for debt settlement

    The first step towards debt settlement is in preparing a proper plan. After a thorough evaluation of your current debts, you need to determine which loans you want to settle first.If you are unable to make payments at all, you may consider filing bankruptcy. Once you declare yourself bankrupt, you will be absolved of your obligations to the lenders.

    In most cases, bankruptcy is the last resort, and you should consider all the alternatives before deciding to head in that direction. Debt settlement is the most feasible approach if you expect a fast revival.

    Prioritize your debts

    You should always settle the secured loans first. Since you have pledged collateral for these loans, you must repay the sum to save your assets. Next, you can think of paying off the suppliers, credit card companies, lease agreement, and the random business expense bills.

    You can expect the financial struggles to continue for a while after debt settlement. However, if you practice control and make sound decisions when it comes to money, you will regain your financial status in due time. 

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