If your business is saddled with massive debt and it seems almost impossible to pay it all back, you’re in good company. According to Zippia, at least 70% of small businesses in the United States have some type of debt – ranging from loans to credit cards to merchant cash advances. Another independent news agency estimates the average debt for small businesses is about $195,000. There are options to help you with these debts, including settling the debt. But what should you do? You have a choice between hiring a business debt settlement company or hiring an attorney who can help with business debt settlement or bankruptcy. This article will go over the differences.
Business debt settlement is just another way of saying you’re going to negotiate with your creditors and pay a lower amount than what you actually owe. This is applicable for loans, credit cards, and merchant cash advances. Business debt settlement is something worth looking into if you can’t pay your debt for whatever reason. Typically, it comes as a lump-sum payment or a restructured payment plan. Debt settlement can help stop late payment fees from accumulating, as well as stop collection calls and letters. In some cases, it can also prevent a lawsuit (which can lead to judgments or wage garnishments) or bankruptcy. There are a few ways you can go about settling your business debt: on your own, with a business debt settlement company, or with an experienced debt settlement attorney. Attorneys can negotiate on your behalf to lower your outstanding balance, but there are some important things to keep in mind when deciding whether to hire a lawyer or a business debt settlement company.
A Debt Settlement Company and a Debt Settlement Attorney
On the surface, a debt settlement company and a debt settlement attorney look exactly the same, because each can negotiate a settlement on your behalf with your creditors. But the similarities end there. A debt settlement attorney is held to American Bar Association guidelines covering the lawyer’s duty to be competent and communicate and to keep client information confidential. In addition, state regulatory agencies oversee the conduct of attorneys. Debt settlement companies are largely unregulated. Some comply with ethical standards, but others have disappointed their clients.
Any debt settlement company may negotiate a debt settlement. But if the company cannot reach a settlement, there is little it can do for you. In addition, a company cannot represent you in a lawsuit or bankruptcy. A lawyer will handle all of your communications with the creditors. The creditors will stop calling you or writing you letters. The lawyer will then negotiate the settlement for you and draw up a settlement agreement. If a settlement cannot be reached, the lawyer will either represent you if you are sued for the debt, or assist you in filing for bankruptcy.
Getting an Attorney
The biggest advantage of getting a business debt settlement attorney is having someone with expertise on your side to help you. Business debt settlement lawyers are well-versed in debt collection laws and have experience negotiating with creditors. This means they are likely to be more successful at securing a settlement than you are on your own. Additionally, if you do not reach a settlement with the creditor, a lawyer can still help you. In this case, they will represent you in the event you are sued or must file for bankruptcy. They will also protect you from debt collection harassment. Collectors have to deal with your attorney instead of you, and that matters because many collection agencies use dishonest and unethical methods to pressure people into paying their debts. Hiring a lawyer means you will get a certain standard of ethical treatment.
The main disadvantage to getting an attorney is the cost. Depending on how complex your case is, a lawyer will charge more. It could end up saving you money in the long run, but it requires an up-front investment. Even if you hire a lawyer, you will still have to participate in the process. The attorney will need information and documents from you to assist in the negotiations. There is no guarantee that you will reach a settlement. There is always the chance that the creditor will simply refuse and then sue you.
An attorney just isn’t right for every situation. Still, there are times when a lawyer may make more sense for you than a company. The most obvious is that you can’t pay your debt. An attorney may be able to negotiate with your creditors to settle the amount you owe for less. There are laws that regulate the conduct of debt collectors. If you feel you’re being harassed or otherwise treated unfairly, a lawyer may be able to help. If you are being sued, you may want to consider hiring a debt settlement attorney to represent you. This is something a company can’t do for you. And if you simply want the strongest help available, an experienced attorney can give you the best representation in your case. A company may not have the same level of experience and expertise as an attorney, and they may not be bound by the same ethical standards.
If you go that route, you want to find an attorney who has experience handling cases like yours. Ask your colleagues and other business owners for recommendations. Ask about their experience and success rate. They can’t guarantee success, but they can explain what the possible outcomes are and how to prepare for them. Talk to several attorneys. Don’t just go with the first one you talk to. Many offer consultations, so use this to your advantage. Read the contract. Make sure you understand what the services are that the attorney will provide, and what the fees are. Make sure they are up front and transparent about all costs. No one wants to run into unpleasant surprises after signing up. Find someone you can trust.
Not every small business owner wants to hire a business debt settlement lawyer or can afford one. If you’d prefer to handle things yourself, you can try negotiating directly with your creditors. You may not get as good a deal as someone with experience would but, given a favorable negotiation, you can still come out ahead. Another option would be a debt settlement company. This type of company negotiates with creditors much in the way a business debt settlement attorney would. Some are better than others, and you’d have to make sure you don’t fall prey to a scam. There is also the chance that settlement would fail and you’d still need to hire an attorney to represent you if the creditor were to sue you. Debt settlement may not be the right answer for everyone though. Sometimes simply consolidating your debts can get you back on track with your repayments. At the other end of the spectrum, for more severe cases, you may want to consider filing for bankruptcy. In that case, you would still be well served to engage an attorney to represent you.
Debt is never a fun thing to think about, and it can seem like an insurmountable obstacle, but the fact is that it’s more common than you may think. Repaying your debt in full is always the preferred outcome, but it’s not always possible, and debt settlement can help ease the burden. The right course of action sometimes is to find an experienced debt settlement attorney who can negotiate with your creditors or represent you in court.
