Businesses are usually no different than consumers when it comes to debt. Many times businesses are overextended on their debt as well, and do not know where to turn. Business debt options are discussed here and this is why a debt relief company such as Nationwide Debt Reduction can help businesses get out of debt.
Business can incur too much debt for a variety of reasons such as:
a.) Unexpected large expenses
b.) Poor management or
c.) The death of a business partner(s).
Regardless of the circumstances a debt reduction can help a business as the same way it can with a consumer… through negotiations.
Also, like consumers, business managers often hold off until the last minute when seeking debt help. Their reasoning may be completely different from that of a consumer, such as the fear of loosing control of their finances or appearing week to the competition, however, in the end, the results are the same. The sooner a business acts, the quicker it can be back on the road to recovery.
Businesses typically have four options to use to help them get out of debt. Those options are working with a debt settlement company, a debt consolidation company, securing a debt consolidation loan or filing for bankruptcy. Filing for bankruptcy, always a last resort is very different for businesses than that of the consumers, which we will discuss in more detail.
Debt Settlement Company
The option we believe most companies should consider when the find themselves in debt trouble is to contact a debt relief company, such as Nationwide Debt Reduction. Like consumers, a debt settlement company can act as a liaison, via a Limited Power-of-Attorney, to negotiate and settle debt for a fraction of what the business owes. This allows the business to free up working capital, while at the same time, put a plan into place that will help them pay off their debt in four years or less. For more information on this option, Click Here.
Commercial debt counseling does the same thing for businesses as it does for consumer credit counseling. We understand that company finances can be varied and complex and that it may take extra time to sort through “the rubble.” This is precisely what a commercial debt counselor does.
Commercial debt counseling combines business debt help with debt settlement. The debt counselor helps both discern problems and offer suggestions to resolve those problems for each specific business entity. In addition the debt counselor may make suggestions for the business managers to follow, such as how finances can be handled differently to improve the situation.
The counselor then negotiates with individual creditors to settle a company’s debts for an agreeable amount. Alternatively, your counselor may negotiate the terms and interest rates of your loans, or may develop a realistic payment plan with creditors.
Debt Consolidation Loans
A business debt consolidation loan is a single loan that is taken out to pay off all the debt that the company has incurred. In this way, the business entity has only one payment per month, to the lender, versus multiple monthly payments to each creditor. The concept behind this process is to seek out a much lower interest rate on the debt consolidation loan, than would otherwise be available with the other creditors. Obtaining a debt consolidation loan for a business can be significantly more difficult as the amount of money you are dealing with in usually in the hundreds of thousands of dollars. Conversely, businesses are created for the sole purpose of creating revenue. Therefore, if revenue is enough to cover the loan and other business expenses, the company is in a win-win situation.
In the event that a business has to file for bankruptcy protection, a business has different options to choose from. They include either a Chapter 7 or Chapter 11 bankruptcy.
A chapter 7 bankruptcy is liquidation bankruptcy for individuals and/or businesses. Filers’ assets are sold, and those monies money are used to pay some debts. In order for creditors to be eligible to receive any of these payments, the creditors must file a claim. All unsecured debts that remain unpaid are usually discharged, while secured debts are granted the property owed to them.
Once a business has filed chapter 7, that business will almost certainly ceases to exist.
A chapter 11 bankruptcy is reorganization bankruptcy for individuals and/or businesses however is mostly utilized only by businesses. It is the usual choice for large companies, as it relies on a restructuring of finances rather than liquidation, and filers retain control of their assets.
In this situation, the business continues as usual, however under the discretion of the bankruptcy court. A creditors’ committee is established by a U.S. Trustee with which the company must negotiate a plan for repayment. In order for the plan to be approved, the creditors must vote for agreement.
To learn about this post, or if you are in need of help regarding your debt, please feel free to contact Nationwide Debt Reduction, Inc. (NDR) toll free at 1-800-890-6658. Our professional advisors will be more than happy to answer your questions. If it is after hours (8:00 am -5:00 pm PST) (11:00 am – 8:00 pm EST) you may go onto our Contact Us website by clicking here, fill out a short form, and one of our advisors can get back to you when it is most convenient for you. We are located in the city of Mesa, Arizona in the Phoenix metropolitan area.