When you started your business, you likely had to use credit cards to get things going. If you did, you are not alone. In fact, 25% of entrepreneurs used at least one credit card to start their business. Yet whether you used a credit card or obtained a loan, the fact is you had debt that needed to be paid back. While this is no problem when things are going great for your business, an unexpected downturn such as what has taken place during the COVID-19 pandemic can turn your finances upside down. As a result, you may find it harder or even impossible to pay back what you owe. When this occurs, you may be able to try what is known as debt settlement rather than file for bankruptcy or sell your business.

What is Debt Settlement?
When you decide to pursue debt settlement, this means you will probably hire a debt settlement company to help you negotiate with your creditors to reach a solution to your debt problems. When you do, the goal of these negotiations is to get your creditors to settle with you for an amount that is much less than what you currently owe. Surprisingly, most creditors are far more open to this idea than many business owners realize.

What are the Advantages of Debt Settlement?
When you hire a debt settlement company to help reduce or eliminate your existing debt, there are several advantages to choosing this process. To begin with, you will not be responsible for handling all negotiations with your creditors, which can be time-consuming, frustrating, and intimidating if you have no experience in this area. Along with this, you’ll have professional negotiators working on your behalf, which will let your creditors know they will need to deal in good faith to get the results they seek.

When Will I be Debt-Free?
While choosing to work with a debt settlement company will not mean your debts are erased overnight, it will mean you will be out of debt much faster than if you had stayed on your present course. For most entrepreneurs who enter into an agreement with a debt settlement company, they are usually debt-free within two to four years. This will be much better than if you had chosen to continue making the minimum monthly payments on your credit cards, which if done can keep you in debt potentially forever.

The Basic Steps
Once you decide to find out more about debt settlement, your first step is to fill out an online form from your company of choice to see if you qualify. If you do, you can then expect to be contacted by a company representative who explains the process and asks if you want to enroll. Once you do, you will then be required to accumulate money in a savings account that is owned by you and is FDIC-protected. After you have the necessary amount of money in your account, the debt settlement company will enter into negotiations with your creditors to reach settlements. When agreements are reached, you are contacted by the company to get your approval and arrange for payment of the debt.

Do Debt Settlement Companies Charge a Fee?
Yes. In most situations, the debt settlement company will charge you a fee ranging from 15-25% of the total debt you owe to creditors. However, it is important to remember any fees can only be charged to you after a settlement has been reached and you have agreed to the terms associated with the settlement. While you may be concerned the fees may be too high, most business owners still save substantially more than if they had chosen to pay the full amount of their debt.

How Can Business Owners Qualify for this Help?
If you are a business owner who realizes you need outside help to pay off your debts, you will still have to meet certain criteria to qualify for help from a debt settlement company. For example, you will need to have at least $7,500 of unsecured debt from credit cards, a personal loan, or other types of debt that are not linked to collateral. In addition, you are required to be a sole proprietor and have the debt be in your name only. Finally, the debt will need to have been acquired due to a specific financial hardship, which can include a job loss, insolvency of your business, or other related difficulties.

What Types of Debt Won’t Qualify for Debt Settlement Services?
Contrary to what some people think, not all debt will qualify for help from a debt settlement company. As to what debts will not qualify for assistance, these include secured debts such as mortgages or car loans, tax debts, or student loan debt. If you have incurred these debts, you will need to explore other options to ensure you can get these debts paid off in their entirety.

Seek Out Professional Assistance
Since you have put in plenty of time and money to make your business a success, don’t let debt problems derail your plans of being a successful business owner. Since almost all entrepreneurs take on debt when starting their businesses, you are not alone should you face financial difficulties. By contacting a reputable debt settlement company today and having experienced, knowledgeable, and certified Debt Consultants negotiating with creditors on your behalf, you can experience a positive financial turnaround.