What Can I Do If My Business Debt Payments Are Too High in 2026?

Have you ever run into a problem where you needed to make payments on several debts but did not have the funds in your bank account to cover them? Managing a small business with high payments on debts can be a tough situation. If you’re running a small business and you’re having trouble paying off your debt, you’re not alone. What should you do if your payments are eating you alive?

Not All Debts Are Created Equal

It’s important to note that not all debts are created equal. Good debt is debt that can help a small business grow. For example, taking on debt for an expansion can be a good thing. But if that expansion fails and you then put a week-long vacation on the company card, that is bad debt. Too much debt, for any reason, is a bad thing, and you need to take control over it.

Four Options

When the bad debt piles up, you essentially have four options: make a deal with the creditor, make a deal with a collection agency, file for bankruptcy, or walk away. And, depending on the circumstances, every one of those four could be the right choice.

You want to pay your creditors what you owe, but you can’t always. Rather than walking away from the debt, it’s usually best to set up a payment plan. You might be able to buy yourself more time to pay, or a reduced monthly payment, or even a lower principal amount. You never know what you’ll get if you don’t ask. So many people in debt are terrified of contacting their creditors. There’s nothing to be afraid of. Don’t ignore them! It is easier to work things out when you communicate with the other party. If you’ve fallen behind on your payments, the creditor may be a lot more willing to negotiate a settlement than you realize. If they say no, you can’t do much except talk to them again until they say yes. Or, you can try another option on the list.

If the debt’s been sold to a collection agency (because it’s so overdue), you’re actually in a better position to settle. The agency probably only paid a fraction of what you owe - maybe ten or twenty cents on the dollar - and everything they can get above that is profit for them. It’s good news for settling, bad news for your credit rating.

Call the collection agency, and offer, say, 40 cents on the dollar. They might say no or call you crazy. But if you can get a lump sum of roughly 50 percent of the bill and put it on the table, they may be very willing to listen. Without that money ready, you might not have enough cash in hand to negotiate a good deal. The keys are having the lump sum and being willing to take the credit hit. Because a settlement on your credit report is not a good thing, it is important to be sure you get the terms in writing, including a statement that they will consider the bill paid in full and report it that way to the credit agencies.

No one wants to file for bankruptcy. But everyone should at least understand the process. Depending on the goal, a business owner can file under either Chapter 7, 11 or 13. Chapter 7 wipes away most of the debt, but it’s a liquidation, which means you may have to close your doors and the trustee will sell off your assets to give creditors at least something. A Chapter 11 or Chapter 13 is a reorganization. You pay some of what you owe over time, but you get to keep your doors open. Talk to a lawyer about what might be best for you. The relief of getting out of debt can be very real.

That leaves walking away. Depending on your circumstances, this could be the easiest. If you don’t have assets that the creditors could use to pay themselves, they may not want to waste the time and money to sue an empty pocket. Look at it from their side: Why would you bother suing somebody who’s already said they can’t pay the minimum, when you know you’ll never get any money?

Wait a Few Years to Get a Decent Credit Rating

Whatever option you pick, you’ll probably have to wait a few years to get a decent credit rating. While it may be hard, just take it in stride. Sometimes that’s just the price you pay for doing business.