What to Know When Settling Business Debts, Credit Cards, and Loans

What to Know When Settling Business Debts, Credit Cards, and Loans

[MUSIC] Hi there, Michael Bovee with
Consumer Recovery Network. And I’m back to talk to
you about negotiating and settling business debt. Most of our channel has
been dedicated to how to resolve consumer accounts that
you can no longer afford to pay. You can consolidate,
whatever the case may be. But now, I wanna talk about how
to do that with a business. I’ve had some bullet
points that I’ve prepared. I wanna touch on each one of
these, but they’re by no means a comprehensive list of the kind
of concerns that you have to have when negotiating
business debt. There are some very different
things that you have to think about versus settling
consumer debt. So let’s get started. The first is whether or not your
business is going to stay open, or if it’s closed, or closing. The reason this is important
is because other vendors, suppliers that you may have. Let’s say, you negotiate a bank
loan, pay it off for less. That shows up on your Dun and
Bradstreet listing, and you have vendors and suppliers that
might look at that, see that, either current ones or ones in
the future, and may not wanna take a risk on lending to you or
helping you stock your shelves. So you have to be careful of
the types of things that you select for settlement or whether you even do it at all
if you’re an ongoing concern. If you’re, say, closed, obviously those
things don’t matter as much. If you are winding down, say,
you’re just going into your slow season, it wasn’t
a great high season, and you don’t know whether or
not you’re gonna make it to late spring when things
start picking up. And you certainly can’t
continue to make payments and afford them through
those months. So you have to do something,
well, you don’t have a choice. Well, those decisions become
easier to make because they’re not really being made,
they’re made for you. But as you begin to think about
winding the business down, you can make some
strategic decisions early rather than later, and
set yourself up for success with negotiations,
so it does matter. Next is whether or not you
personally guarantee an account, and that’s important. Sometimes we forget,
I’ve done it, right? I open up a business account and
I go into the bank and I give my social security number as part
of the application process. They’ve ran my credit,
along with the business, and they’ve also included a clause
in the contract, whether I read it fully or just forgot about
it, that I’m on a hook. I personally guarantee you that
if the business stops paying, that I’m personally
going to pay. And that means that your
personal assets are on the line if you don’t. If you just blow off,
you’re closing the business, you blow off the open credit
lines that haven’t been paid, credit cards, whatever. They can come after you
personally, and do, actually. And it’s really popular,
actually, with Wells Fargo, Chase, Capital One,
American Express, these personal guarantees. Next is size of debt,
size matters. The larger the debt,
the more likely, in my experience, to get more
dynamic settlement results. The smaller the debt, sometimes
the settlement results aren’t as great, that’s very consistent
with consumer debts as well. That I don’t wanna
harp on it too much but I’ll give you an example. A couple months ago I did
a business account, a file. The business was winding down,
it wasn’t fully closed but it certainly wasn’t
gonna remain open. And there was a $197,000
business line of credit that we negotiated
with a debt collector, just on the other side of the original
creditor sending it to them. The deal with the original
creditor would not have been as good as the one that we got
with the debt collector and sometimes that’s the case. Sometimes, you strategically
decide who you’re going to negotiate with and get the best
settlement from in advance. So it’s important to
have that intel and weigh all of those options and
do the math, do the numbers. Any liens or
encumbrances on inventory or property, real property,
machinery, that kind of thing, that matters in whether or
not you look to settle a debt. And you may have forgotten
if there were UCC financing statements that were filed
along with the loan. And you put inventory or
machinery that you need to do your job to stay open, you have
to be very careful in whether or not you choose to
renegotiate terms, try and negotiate a lower balance
payoff, when there are liens filed against a real
property and inventory. That’s something we’re very,
very good at discussing with you one-on-one so
reach out to us on the hotline. Affordability and settlement
targets that are realistic. So this is very similar
to consumer data. When you’re negotiating business
accounts, you need to know what your targets are so that you can
select the right accounts that you’re gonna settle or
not settle if you’re open. And you need to know what you’re
realistically able, capable of doing, or what these lenders, if
you’re closed, will settle for. And then, whether or not you can
do that with whatever you’re doing now, or
the financial resources that you have available to you either
now or in the near future. One of the biggest problems I
find with people that call in, sometimes they’ve read Internet
articles, things that they’ve come across, forums for example,
and the discussion is about how to settle for
pennies on the dollar. But pennies on the dollar
doesn’t happen. I mean, it did at the height
of the recession. And it can if you’re
on a fixed income, no asset kind of situation, your collectibility score,
if you will, is quite low. But for most business owners,
my experience is is that pennies on the dollar
is just not an option. We can talk about those
kind of issues in the comments below the video
here and on our website. Actually, we have a pretty
active page about negotiating and
settling business accounts on the
site. And then, of course,
you have the hotline, call us. Paying your deals. Now, this is important
because it’s something that people may not be aware of. When you lump sum settle, and
account for less than you owe, sometimes there’s
terms available. So depending on the creditor,
depending on the circumstances, depending on how long you’ve
gone without paying and whether you’re dealing
with a debt collector, or even in litigation. Sometimes, some pretty dynamic
deals can be put together. Where not only do you get
the reduction of balance but you also get time to pay, in
some cases, 12 months or more. And I’m not talking about
renegotiating terms, where you’re paying back
the full balance and signing some new
credit contract, where you’re still gonna pay
the full balance back now over a longer period of time because
it’s more affordable for you. I’m talking about, say, settling
the debt for half off and getting 12 months to pay 50%. That can make a deal that
would have otherwise been unaffordable. You didn’t have
the sources to fund it. Highly affordable and more likely for you to be
able to follow through on it. So, you have to
think about that as that just sounds out of reach. Actually, maybe not. So, that’s another factor
that we can talk about. There are a lot more details
to cover about whether or not you should try to
negotiate business debts. We can’t cover them all
in these brief videos, that’s why we wanna talk to you
in the comments or on the phone. One thing I’ll leave you with
is that, believe it or not, Small Business Administration
loans, SBA loans are actually
negotiable as well. So if you’re struggling to
keep current with an SBA loan, don’t think that this
isn’t an option. Reach out to us through
the comments, on the hotline. You can reach me, Michael Bovee,
by pressing number two. [MUSIC]

Comments (5)

  1. First great video……I have a 2009 business loan that I got a judgment on with Wells Fargo for 20k that in 2010 went to 29k I don't have any assets or and want to get this over with they can't garnish me and my business closed in 2009 (broke) on my judgment it says my business name and mine how can I settle this and what kind of money do I have to try to come up with reAlisticly I'm so lost

  2. Thank you for the response should I consider bankruptcy the most I could have possibly afford would have been at 30% of the original judgment and that was pulling from everyplace I possibly could

  3. I closed my business last month, I have a Chase line of credit with a current balance of 80k with a personal grantee.  What can I do  to settle this at a lower amount?

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