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Austin Business Debt Relief Lawyers: Navigating Legal Options for Struggling Companies

Running a business can be extremely rewarding, but it also comes with its fair share of challenges. One of the most difficult situations many companies face is dealing with overwhelming business debt. From traditional bank loans to Small Business Administration (SBA) loans, factoring agreements, merchant cash advances and more, debt can quickly spiral out of control for Austin businesses.If your Texas business is struggling under the weight of debt, know that you have options. Working with an experienced Austin business debt relief attorney can help you understand the legal solutions available to get your company back on stable financial ground. This guide will walk through some of the common types of business debt, the potential consequences of not addressing it, and the legal options a business debt relief lawyer can help you pursue.

Common Sources of Business Debt

There are many ways businesses take on debt to launch or grow their operations. Some of the most common sources include:

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  • Bank Loans: These are traditional loans issued by banks and often require collateral like real estate or equipment. They have set repayment terms with interest.
  • SBA Loans: Loans backed by the Small Business Administration. These provide favorable terms and long repayment periods but still must be repaid with interest.
  • Factoring Agreements: A business sells its accounts receivable (invoices) to a factoring company at a discount to obtain cash faster. The business then owes the factor.
  • Merchant Cash Advances (MCAs): MCAs provide a lump sum in exchange for a percentage of future credit card sales. There are often no set repayment terms.
  • Business Credit Cards: Credit cards can help with short-term cash flow but quickly accumulate interest if not paid in full each month.
  • Personal Loans or Credit: Many business owners use personal credit or assets to secure business loans or credit cards.
  • Payroll & Vendor Debt: If cash flow is tight, businesses may fall behind on payroll, taxes, vendor payments and more.

Consequences of Unresolved Business Debt

Ignoring growing business debt rarely makes the problem just go away. Here are some potential consequences:

  • Lawsuits from creditors
  • Foreclosure on collateral like real estate
  • Vehicle repossession
  • Garnished bank accounts
  • Seized equipment or assets
  • Damaged business credit
  • Extremely high interest rates
  • Inability to secure additional financing
  • Bankruptcy
  • Business failure

Essentially, unresolved debt makes it very difficult for a business to operate and grow. Acting quickly gives you more options.

Working with a Business Debt Relief Attorney

If your business is facing unmanageable debt, partnering with an experienced Austin business debt relief lawyer can help you:

  • Understand all your options – The laws regarding business debt are complex. An attorney will explain options like debt settlement, payment plans, debt restructuring and more.
  • Negotiate with creditors – An attorney can often negotiate better settlements, interest rates and repayment terms than you may be able to on your own.
  • Defend against lawsuits– If creditors sue, an attorney can help you respond and raise defenses to protect your business interests.
  • Explore bankruptcy strategically – While bankruptcy may still be an option, it comes with long-term consequences. An attorney can help you make this decision responsibly.
  • Protect your assets – If certain assets are critical to your business, an attorney can help shield them from seizure through legal strategies.
  • Improve cash flow– Your attorney may identify ways to improve cash flow to help resolve debts, like renegotiating leases, rates or contracts.
  • Develop a robust plan – Your attorney will look at your whole financial situation to develop a tailored debt relief plan.

Key Debt Relief Options for Businesses

Some of the most common legal options a business debt relief attorney may explore to address your company’s debt include:

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Debt Settlement

With debt settlement, an attorney negotiates directly with creditors to settle on a lump-sum payment that is less than what you owe. This helps resolve the debt at a discount. Settlements often range from 25% to 80% less than the full amount.Pros

  • Resolve debt for less than you owe
  • Avoid bankruptcy

Cons

  • Damages credit
  • Creditors may balk at large discounts
  • Debt relief may be taxable

Payment Plans

Your attorney works with creditors to develop an extended repayment schedule that works with your cash flow. This helps avoid default while slowly paying off debts.Pros

  • Pay off debt over time
  • Less impact on credit
  • More flexibility

Cons

  • Takes discipline to stick to the plan
  • Interest continues growing during repayment period

Debt Restructuring

Restructuring involves changing the terms of the debt, such as extending the loan term, altering interest rates, or postponing payments temporarily.Pros

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  • Make debt more manageable
  • Avoid defaulting

Cons

  • Doesn’t reduce principal owed
  • Less flexibility for creditors

Chapter 11 Bankruptcy Reorganization

Chapter 11 allows you to restructure and modify debt through the courts while continuing business operations.Pros

  • Stops collections and lawsuits
  • Discharges large amounts of debt
  • Allows restructuring of debt

Cons

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  • Damages business’ credit
  • Complex process with court oversight
  • Expensive legal fees

Chapter 7 Business Bankruptcy Liquidation

With Chapter 7, the court liquidates your business assets to pay creditors. Remaining debt is discharged but operations must cease.Pros

  • Wipes out eligible business debt
  • Stops lawsuits and harassment
  • Allows you to start over

Cons

  • Closes existing business
  • Very damaging to business credit
  • Liquidated assets pay debts first

Finding the Right Attorney for Your Business

If you decide professional legal help is needed to address your company’s debt, make sure to seek out an attorney with specific experience in business debt relief. Look for someone who is knowledgeable about:

  • The full range of debt relief options for businesses
  • Negotiation strategies with various business creditors
  • Business bankruptcy law
  • Protecting your business assets
  • Improving struggling businesses’ cash flow

Also look for great client communication skills and someone who will thoughtfully evaluate your specific situation to develop a tailored debt solution.

Act Sooner Rather Than Later

The bottom line is that ignoring growing business debt rarely makes the problem just disappear. In fact, it usually only gets worse. Partnering with an experienced Austin business debt relief attorney gives you the best chance to resolve your debt responsibly while protecting your business interests. Don’t wait to seek legal help – it’s critical to act quickly while you still have options. An attorney can provide the expertise and advocacy needed to get your company back on track.

Delancey Street is here for you

Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

"Super fast, and super courteous, Delancey Street is amazing"
Leo
$500,000 MCA Restructured Over 3 Years
"Thanks for helping me in literally 24 hours"
Jason
$250,000 SBA Loan Offer in Compromise
"Great choice for business owners who need a trustworthy partner"
Mary
$350,000 MCA Restructured Over 2 Years

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