The accumulation of business debt is part of being an entrepreneur, whether you are a new start-up facing the combined burden of day to day expenses together with repayment of initial start up costs or a long time established enterprise that has come upon a period of inactivity or new competition. And business debt can quickly spiral out of hand, regardless of how shrewd an entrepreneur you may be. The cost of running a venture is high, the risks higher and the economy not too supportive. When the business debt outweighs the accounts receivables, you have a problem. When calls from creditors outnumber calls from clients, you have a bigger problem. And when you are spending so much time trying to deal with your financial obligations that you have little time to focus on your enterprise, it is time to seek business debt relief.
Where do you find business debt relief? There are credit unions, consumer groups, financial support groups and even universities that operate non-profit financial counseling. However, this can be a misnomer. Just because they advertise non-profit does not mean that their services are free; most do charge fees, and many are not even reduced from those charged by "for profit" counseling firms. But the advantage to any financial counseling company is that they can often negotiate a better solution with your creditors that you can by yourself. Creditors seem to be willing to negotiate with debtors who are working with a recognized counseling program to create a debt repayment plan. Under these circumstances, many creditors will even accept a reduced amount of interest in conjunction with principal repayment.
Therefore, first of all be a bit wary of organizations that claim to be a "non-profit" organization. The use of this word does not prove that the services will be free or even lower cost and worse yet, they may not be legitimate. Some non-profit credit counseling organizations have fees that are hidden as membership costs or charges for individual services that can add up to a hefty amount. Steer clear of firms that have a monthly charge or a pre interview membership fee. A reputable credit counseling firm will charge a fee that is determined upon the complexity of your individual situation and the business debt relief that needs to be dealt with. But the bottom line is not the cost but how reputable the counseling firm is. You want a firm that specializes in business debt relief, one that is well know by creditors and that will have a high recognition value with them that will result in their trust and eventual agreement to negotiate.
Credit counselors advertise business debt relief consulting through local newspapers, the Internet, or in the telephone yellow pages. The forms of relief that will probably be offered will be debt consolidation, debt settlement and Chapter 11 Bankruptcy. Debt consolidation seeks to bring all financial obligations together into one account that requires that one affordable payment be made monthly. The creditors must agree to the share of this payment they will receive. With a settlement, the creditors agree to take a lesser amount than the total amount owed, usually by eliminating most of the interest. Bankruptcy does not eradicate debt. Once a Chapter 11 business debt petition is filed the assets of your business will be taken up by a court appointed conservator who will pay your creditors according to a court devised schedule. No business debt relief magic happens in a bankruptcy court and it is best to steer clear.
Check these links to learn more:
http://www.commercialdebtcounseling.com/
http://www.commercialdebtcounseling.com/business/business-y/business-index.shtml
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