When a business closes, a good-sized pile of debts is expected from the suppliers, landlords, service providers, utilities, and probably a private lender or bank. After notifying this creditor of the upcoming closure, you plan to pay bills in full, consider filing for bankruptcy, or settle for less than full payment. There is a usual approach like ignoring debts and hoping creditors ignore you – this can be tempting, but as much as possible don’t go this route. The situation may result in being hounded by repo people, collection agencies, lawyers, and lawsuits.

Debt settlements

All business debts are negotiable as to their terms. Therefore, business and company debt negotiation helps settle problems. Every type of business obligation or debt has:

• Terms as to amounts due
• Time is given to pay
• Interest
• Additional payments
• Security or guarantees

In general, all these terms are negotiable.

How to negotiate business and company debt?

Assuming you can’t pay all debts in full, the question is: how much less do the creditors settle for? When guessing, it will depend on the type of creditor, the creditor’s attitude, and the legal details of the debt. For instance, suppose the business is a corporation or LLC without personally guaranteed debt in person; a creditor knows it doesn’t have the option to collect from you, so you are willing to accept a small portion of what a business owes as a complete payment.

If you owe a debt personally with a friend cosigned for it, the creditor has much leverage. For instance, suppose your business is a corporation or LLC without any personally guaranteed debts. In this case, a creditor knows it doesn’t have the option of collecting from you personally. So, it might be more willing to accept a small portion of what the business owes as complete payment.

Whatever the type or amount of debt, it is not going away. You will need to negotiate a debt settlement with a creditor to have a debt forgiven or paid. Negotiate own debt settlement or choose to hire a business lawyer with experience in:

• debt settlement
• bankruptcy

If trying it on your own, you may follow these steps to a debt settlement negotiation.

Prioritize debts

When short of cash, it is a good idea to prioritize your own debts. Determine which debt is more essential and pay those first things. If you have pledged an asset as collateral and keep it, you will want to pay debt first. The collateral is called secured property and the creditor is a secured creditor. For instance, the business offers machinery as collateral for a business loan. The bank is a secured creditor, and the loan is secured by the collateral.

If you are facing business and company debt, let it be handled by the debt settlement agreement.