How does a Small Business Owner Cancel Credit Card Debt?
There are many options for small business owners to get out from under credit card debt. While many of the same principles apply to individuals getting out of debt or small businesses getting out of debt, there may be more options for small businesses. That is because issuers of unsecured debt (like credit cards) have more leeway when dealing with small business accounts than with personal accounts. In the US, money from the federal stimulus program encourages lenders to settle debts for less than their face value.
The reasoning is that when the economy recovers, small businesses are more likely to begin to turn a profit than an individual card holder, thus stimulating the economy further. In an improved economy, lenders believe they will earn more having small businesses as clients rather than individuals.
There are debt relief specialists who will negotiate on behalf of small businesses with credit card debt, and often they can get improved terms for the debt, such as a cut in interest rates or waiver of fees. But you can do much of this negotiating yourself.
Unfortunately for some small business owners, their business's debt is inextricably bound up with their personal debt. When just starting out, individuals wanting a small business credit card often have to put their own credit record on the line to be approved. After several years of good payment history, some banks will allow the business's credit to be separated from the individual's credit.
If you are responsible for your small business's credit card debt, then it will mostly be a matter of coping by making minimum payments on time and cutting up the cards so you don't make the problem worse. If you anticipate trouble meeting your monthly obligations, then don't wait: call up your credit card issuer and explain the situation clearly and calmly. They don't want your account going into default any more than you do, and often they are willing to waive fees, lower interest rates, or cut minimum payments in order to keep your account afloat until your situation improves.
If you are unable to avail yourself of any federal stimulus package programs or services that will negotiate on your behalf, then you will have to take action: retrieve any cards held by employees, and cut them up as well as your company credit card. The first step toward getting out of credit card debt is to stop the hemorrhaging of money by not using the cards.
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