Debt settlement is a form a debt relief where you talk to your creditors in a bid to persuade them to essentially remit or ‘forgive’ part of the debt provided you pay the balance. If the settlement is successful, you only pay a part of the amount owed, with the rest of it being cancelled.
As a business owner seeking debt settlement, it is important for you to understand that debt settlement is only one of a number of debt relief strategies that you can use if your business is struggling with debt. Before hiring a debt settlement company, make sure you educate yourself on the advantages as well as the effects of this strategy.
Below are some of the advantages.
With debt settlement, you can avoid filing for bankruptcy
Avoiding bankruptcy is among business owners’ top reasons for seeking debt settlement. Bankruptcy is a nuclear debt relief solution and it has perhaps the most severe repercussions that you may never recover from.
In addition to the record of bankruptcy being in your credit report for 10 years, you are asked if you have ever filed for bankruptcy in every job, credit card, or loan application. If you’re not forthright about the fact that you at some point filed for bankruptcy, you can be prosecuted for fraud.
If you effectively settle your debts with your creditors, there will be no need to file for bankruptcy and you won’t have to deal with the harsh consequences of a bankruptcy. Additionally, the debt settlement entry in your credit report will only be there for seven years.
Debt settlement offers relief from crushing debts
The purpose of business debt settlement is not ripping off your creditors by paying only a part of what you owe. The fact is that many legitimate business owners run into cash-flow problems due to unforeseen circumstances and they become genuinely incapable of meeting all their debt obligations.
These are the sort of people that debt settlement was aimed at providing assistance to. As soon as you have negotiated and settled your debt with all your creditors, you will be more or less debt-free. And it will not take you as long as or cost you as much as it would have had you attempted to meet your debt obligations the typical way.
It is also in the best interest of creditors for you to go for debt settlement rather than file for bankruptcy because, that way, they can still recover some of their money. They are fully aware of this and that is why they might be willing to accept debt settlement.
You become debt-free in less time
A good debt settlement company will help you complete the process in a relatively short time, typically two to four years. You would spend far more time paying back your debt with other debt relief strategies, which may not be an option for you given you are looking for debt settlement.
Nicole A. Vincent has been writing about personal and business debt settlement professionally for eleven years. She has a great passion for helping people and businesses understand the principle of managing debt.