You may or may not hire a debt settlement company to get rid of your business debts in a more manageable way. No matter whichever approach you may prefer you must know the working process as well as the ways to negotiate with your business creditors to find an easy way out. Remember, the process is:
- Needs a lot of discipline
- Requires planning and also
- Have risks and consequences.
Taking all these into consideration, it is best to hire a professional debt settlement company for better and most desired results. Just make sure that you choose such debt settlement companies after thorough research as all of them are not created equal and most of them are scams, will work for their interest and may even run away with your money leaving you in a further dire situation with all your available money lost. To ensure that you have chosen and working with a reliable and reputable debt settlement company you must:
- Visit several websites and companies
- Compare their services and package
- Know about their fees and other charges
- Read the terms and conditions and also
- Read their reviews of their previous customers
- Choose the ones that have the most positive reviews and
- Check the accessibility and their availability by calling at the contact numbers and
- Visit their offices personally.
Lastly and perhaps most importantly, never choose a debt settlement company that guarantees results and huge reduction as it is entirely at the discretion of the creditor whether they will at all accept your request for a reduced payment against your outstanding loan amount. The best ways are to check their debt settlement ratings by looking at few of their previous assignments of late.
To choose the right debt settlement company you must go to a debt relief network first rather than to the company directly. This is because, to be an associate of the debt relief network, the debt settlement company must pass an ethical standards test. They will be more legitimate and respected, efficient and proved to increase your chances of eliminating the debt.
Their working process
Assuming that you have settled chosen the best debt settlement company after research it is time to know about their working process. Knowledge about the working process of a debt settlement company will not leave any loose ends and make sure that you will get exactly what you want in the end.
- Once a debt settlement company is hired and takes over it is now up to them to talk to your creditors and negotiate for a deal. They will focus their negotiation on the rate of interest in which the payment was to be made and make the creditors forgo the interest and late payment charges that may be mounted on the actual bill amount.
- When the negotiations completed and an agreement has arrived you will need to make the necessary arrangements to pay the negotiated amount to the creditor within the newly stipulated time. You may have to create a separate savings account to create the desired fund for payment. However, you can make the payment in one shot or in monthly installments as agreed by both the parties.
- The forgiven amount will reflect in your credit history for seven years. The effect of the settlement will drop your credit score significantly and the credit bureaus may also write off debts that are more than 180 days old. Moreover, the amount reduced will also become your taxable income according to the Internal Revenue Service.
- The debt settlement company will charge their service fees once an agreement is reached and you make the payment or pay the first installment. According to the Federal Trade Commission, no debt settlement company is allowed to charge any fees upfront. If your company asks for it to dump them and look for a new one immediately.
A good and reliable debt settlement company should handle the customer situation well and have high negotiation skills. They will have a proven track record and be an associate of the debt settlement network.
Ways to negotiate
It does not matter how your business got into debt or how it got in over its head. There are a lot of reasons for that. It is more important for you to know the ways to negotiate with your creditors if you find that the debt is too much for you to handle especially if you are in no position to hire the service of a debt settlement company or want to save on the 15 to 25% fees that they will charge for their service.
- It is very crucial that you have a plan formulated much before you make the call to your creditors. To begin with, you must put together a manageable and reasonable monthly budget. This budget will help you to reach your goal to lower your outstanding balance, receive a lower interest rate, and push out the payment schedule.
- Once you have a plan and a budget it is time to make the call to your creditors. Keep it very systematic and organized by making a list of all your creditors and categorizing and prioritizing your debts according to the largest balance one and down to the lowest. Start calling up the most urgent creditors or the ones that have the maximum balance or the ones that are threatening to shut off your service. Paying them off first will keep your business running.
- Do not be shy when you negotiate with your creditors on your own. Instead, ask for a break and tell them about your financial condition. Tell them about your business plans and sources from where you can get money in the future. If you are upfront and honest about your situation the creditors will often be willing to work with you and even suggest you a few good ways to manage your debt in the future.
Put the agreement in writing once you reach it to keep a paper trail. Once done, put all your focus back on the business to pay off the debts as agreed on time.
Marina Thomas is a marketing and communication expert. She also serves as a content developer with many years of experience. She helps clients in long-term wealth plans. She has previously covered an extensive range of topics in her posts, including money saving, Budgeting, business debt consolidation, business, and start-ups.