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The Denver Bankruptcy, Debt Settlement, Tax Resolution Attorneys
If your small business is struggling with debt, you should consider debt settlement. The debt settlement attorneys at The Wink Law Firm have helped small businesses and their owners settle a number of different types of debt including credit cards, commercial leases, merchant cash advances, vendor debt, and business lines of credit.
Business owners can settle most types of unsecured business debt. Unsecured debt means there is no collateral for the loan, such as credit cards and vendor debt.
Certain secured loans also can be settled, depending on the creditor and the collateral. For example, Merchant Cash Advance loans may have a blanket lien on all your company’s assets, but their ability to repossess collateral can be limited. In many cases, these secured creditors will accept a settlement instead of attempting to seize collateral.
However, most purchase money lenders, which provide financing for and hold a lien on a particular piece of equipment, will not settle until the equipment is surrendered. Similarly, banks that lend secured lines of credit to small businesses typically require a surrender of the business assets before negotiating a settlement. That said, the less valuable the business assets, the more a secured creditor will be willing to negotiate debt settlement without taking the collateral.
It is definitely possible to settle liability from a business lease or commercial lease. However, doing so will almost always require vacating the premises. Once this is done, settlement of the remaining liability can be possible. Because commercial landlords tend to be very aggressive, it is best to have a settlement plan in place before going into default on the lease and vacating the premises.
Settling government debt (ex., taxes to the IRS, SBA loans) requires a more formal debt relief process such as business bankruptcy or an Offer in Compromise. The attorneys at The Wink Law Firm can advise you on which small business debts can be settled and how to best position you and your business for settlement.
Compared to settling consumer credit card debt, there is more variability in how much is required to settle business debt. Consumer credit cards typically settle for about 50% of the balance owed, while business creditors could accept much less (as little as 10%) or much more (up to 90%).
At The Wink Law Firm, our experience is that creditors holding larger debt tend to be more lenient because they know their ability to collect large sums could be limited. However, the business’ ability to repay also factors into what a creditor is willing to accept. The debt relief attorneys at The Wink Law Firm will give you specific advice on what to expect for settling your business debt after reviewing the details of your business and creditors in a free consultation.
Settlement of a business debt will typically remove your personal liability for guaranteed business debt. It is common to settle both the business owner’s guarantee as well as the LLC or corporation’s liability for business debt. Occasionally, the creditor will inquire as to the owner’s financial situation prior to accepting a settlement offer. The Wink Law Firm has experience in such situations and can advise you on how to best present you and your business for a favorable settlement.
You can keep operating your business after settling its debt. However, creditors tend to be willing to accept less to settle when the business is dissolved. The Wink Law Firm has experience settling business debt even when the debtor business is still operational. In such cases, the business and owner can put the debt behind them while continuing to earn a living from the business.
