Firms advertising business debt relief negotiate reduced interest rates and payments to your creditors. Many troubled companies use them instead of going through a long formal bankruptcy process. If you go this route, all you have to do is pay the firm's service fee.
Before you decide to use a debt relief firm, there are several things you should know. First, make sure this firm does not work the "collections" side of debt negotiations. This means they are working both sides of the equation. They may claim this gives them leverage. But you must ask yourself, "do they have my best interests at heart?" The answer is, probably not. However if you do want to use a debt negotiation firm, talk to several. Compare how much each one is going to save you and make sure you feel comfortable with their operations.
Second, consider that you can do your own negotiations with creditors as well. Be aware that it may be more difficult. Sometimes it helps to have a third party involved. If you negotiate yourself, your creditors may not give you much of a break and you will find it to be an emotionally trying experience. But you can handle matters yourself.
Some Tips On Doing Your Own Debt Negotiations
First understand that there are no debtor's prisons. If you cannot pay your creditors because of a failing business, you are not a criminal. As long as you has not been involved in fraudulent activities, your creditors cannot threaten you will jail and they do not have the right to harass you personally.
Second, you must stand your ground with these creditors. Creditors will call you day and night. Each one will demand that you pay them before anyone else. Make the decisions that are right for your business's survival. Determine your own priorities on who absolutely must be paid and in what order. Also do not ever post date a check to pay someone, even if a creditor asks for it. This can get you in bigger trouble. In fact sometimes, this can be interpreted as check fraud.
Third, do not make promises you cannot deliver on with creditors and collection agencies. Do not take money needed to operate the business and pay unsecured debts. Remember the only hope you have to pay your creditors is to turnaround your business. You cannot do this if the business does not run.
Finally, remember that most creditors would rather reach an agreement out of court as opposed to in court. Court caseloads are high costly and judges would much rather see these matters negotiated outside the courtroom. So stand your ground, don't do anything illegal to get business debt relief, and focus on making a profit. You may just pull your business out of the fire.
