{"id":126345,"date":"2021-05-26T11:49:17","date_gmt":"2021-05-26T11:49:17","guid":{"rendered":"https:\/\/precoinnews.com\/?p=126345"},"modified":"2021-05-26T11:49:17","modified_gmt":"2021-05-26T11:49:17","slug":"last-year-was-tough-for-many-small-biz-owners-how-to-manage-accumulated-business-debt","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/industries\/last-year-was-tough-for-many-small-biz-owners-how-to-manage-accumulated-business-debt\/","title":{"rendered":"Last year was tough for many small biz owners: How to manage accumulated business debt"},"content":{"rendered":"

How can I get rid of all of this business debt I accumulated this past year?<\/p>\n

Today, I will put on my old hat as an ex-bankruptcy lawyer to answer this question.<\/p>\n

To quote Al Pacino in Godfather III: “Just when I thought I was out, they pull me back in!”<\/p>\n

Essentially you have four options:<\/p>\n

1. Cut a deal with the creditor<\/h2>\n

Of course, you would like to pay your creditors in full, but sometimes that is not possible. Rather than just walk away from the debt then, it is usually best to try and work out some sort of payment arrangement with the creditor. Maybe they can give you more time to pay, or lower your payments, or even cut the principle.<\/p>\n

You don’t know until you ask, and especially if you are behind in your payments, you may find the creditor is far more amenable to a negotiated settlement than you may realize \u2013 especially after the year we have all just had.<\/p>\n

2. Cut a deal with the collection agency<\/h2>\n

If the debt is so overdue that it has been sold to a collection agency, you actually are in better shape vis-\u00e0-vis a settlement. Why? Because the collection agency bought the debt at a steep discount, maybe 10 or 20 cents on the dollar. As such, anything over that amount is profit.<\/p>\n

As I said, that is good news for you insofar as negotiating a deal, but yes, bad news for your credit rating (that’s a different column.)<\/p>\n

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What you can do is call up the collection agency and look to strike a bargain. Offer them, say, 40 cents on the dollar for the debt. They may say no, tell you you are crazy, whatever. But if you can get together a lump sum payment of, say, 50% of the total or so, and offer that, you just may find they are very willing to listen to that offer.<\/p>\n

The key is to have a lump sum payment ready and\u00a0be willing to suffer the consequences on your credit rating.<\/p>\n

If they do agree to terms, make sure that you get all relevant terms in writing, especially that they will agree to consider the debt paid in full and will report it to the credit agencies as such.<\/p>\n

<\/p>\n

Couple anguishes over bills. (Photo: skynesher \/ Getty Images)<\/span><\/p>\n

3. File bankruptcy<\/h2>\n

Yes, I understand that no one wants to file bankruptcy, but that is life in the big city sometimes. What I also know is that I never got a \u201cthank-you\u201d note from a litigation client, but I received many from bankruptcy clients because the BK made their life easier.<\/p>\n

Depending upon your goals, situation, and your desired outcome, you could file a Chapter 7, 11, or 13 bankruptcy.<\/p>\n