Pittsburgh Business Debt Relief and Debt Settlement Lawyers[yoast-breadcrumb]
Pittsburgh Business Debt Relief: Options for Struggling Companies
Running a business is hard work. As a business owner in Pittsburgh, you face many challenges – competition, regulations, hiring good staff. And of course, managing the financial health of your business.It’s easy for companies to fall into debt. You might take out loans to expand, or struggle with cash flow and fall behind on bills. Before you know it, your debt has snowballed.If your Pittsburgh business is facing unmanageable debt, you have options. Debt relief programs can help you negotiate, settle, or even eliminate your business debt.This article will cover common debt relief options for Pittsburgh businesses, including:
- Debt settlement
- Debt negotiation
We’ll explain how each process works, look at pros and cons, and help you decide if it could be right for your company.
Debt Settlement for Pittsburgh Businesses
Debt settlement, also called debt relief or debt arbitration, is one of the most popular options for companies in debt. Here’s how it works:
- You stop making payments on your debts and instead put money in a secure account. This shows creditors you’re serious about paying what you can.
- A debt settlement company negotiates with your creditors to settle debts – pay a lump sum that is less than what you owe.
- Creditors agree to settlements because they’d rather have a portion of the debt paid than risk you defaulting completely.
- Once enough funds accumulate in your account to make settlement offers, the negotiations begin.
Debt settlement can wipe out unsecured business debts for pennies on the dollar. It helps you avoid bankruptcy. And it’s faster than debt management plans or debt consolidation loans.But debt settlement also has downsides:
- Your credit score will drop when you stop paying creditors. Late payments stay on your credit report for 7 years.
- Creditors may sue you or continue collection efforts during negotiation. Debt settlement lawyers can help respond to lawsuits.
- Any forgiven debt may be taxable income. Talk to a tax professional about possible tax implications.
- Debt settlement companies charge fees, often a percentage of your enrolled debt. Make sure any fees are clearly explained up front.
Debt settlement works best for companies with steady cash flow who’ve fallen behind on unsecured debts like business credit cards or vendor bills. It can wipe the slate clean so you can rebuild and move forward.
Negotiating Directly with Creditors
Instead of using a debt settlement company, some business owners negotiate debt relief directly with creditors. This DIY approach can work if you have strong negotiation skills.Follow these steps to negotiate debt settlements on your own:
- Review debts and prioritize. List all business debts and sort by amount owed. Start with the largest balances first.
- Gather documentation. Have details on your accounts – original contracts, statements showing charges and payments, communication with creditors.
- Calculate a reasonable offer. Decide what you can afford to pay as a lump sum. Often creditors accept 20-50% of the balance.
- Call creditors. Explain your financial hardship and make a settlement offer. Be prepared to share financial documentation.
- Get any deal in writing. If a creditor agrees to a settlement, get the details in writing before paying.
- Consider tax implications. Forgiven debt may count as taxable income. Consult a tax pro.
Negotiating directly with creditors takes time and effort, but avoids debt settlement fees. For small debts with local vendors, DIY settlement can work well. But for large, complex debts, working with professionals may be more effective.
Business Bankruptcy in Pittsburgh
For companies in truly dire straits, bankruptcy may be the last resort. The most common type for businesses is Chapter 11 bankruptcy. Here’s an overview of the Chapter 11 process:
- You continue operating your business while restructuring debts under bankruptcy court supervision. Management stays in place unless the court appoints a trustee.
- Certain debts can be reduced or discharged completely, such as unsecured debts. Secured debts like mortgages usually need to be paid back.
- You propose a reorganization plan showing how debts will be repaid, contracts honored, assets managed. Creditors can negotiate the plan terms.
- Once a plan is approved by creditors and the court, you emerge from bankruptcy with debts restructured or eliminated.
The benefits of Chapter 11 bankruptcy include stopping foreclosures, lawsuits, wage garnishments, and other creditor actions. It gives you time to restructure debts and renegotiate contracts. Bankruptcy can help save a viable business.But it also comes with drawbacks:
- Bankruptcy can damage your business’ reputation and credit. Suppliers or customers may lose confidence.
- The court is involved in business decisions and oversight during bankruptcy. Management gives up some control.
- Bankruptcy is public record and appears on credit reports for 10 years.
- Legal and court fees for Chapter 11 average $15,000-$30,000, sometimes more for large bankruptcies.
For small businesses in Pittsburgh, bankruptcy may do more harm than good. But large companies often emerge stronger after using Chapter 11 to restructure.
Which Debt Relief Option is Best?
There is no one-size-fits-all solution for business debt. Consider factors like:
- Business size – Large corporations have more restructuring options in Chapter 11 bankruptcy versus sole proprietors or small companies.
- Reasons for debt – If debt stems from temporary setbacks or growth plans gone awry, negotiation or debt settlement may help get finances back on track. Bankruptcy is more fitting for systemic issues.
- Types of debt – Unsecured debts like credit cards, vendor bills, and lines of credit have more flexibility to settle for less versus secured debts like equipment financing or mortgages.
- Ability to pay – Companies able to scrape together lump sums can settle debts for less through negotiation or debt settlement. Those with no ability to pay may need Chapter 11.
- Creditworthiness – Bankruptcy damages your business’ credit for years. Debt settlement also hurts your score. If credit access is critical, explore options to pay debts in full.
- Tax implications – Forgiven debt may count as taxable income. Understand possible tax consequences before agreeing to settlements.
Finding the Right Debt Relief Company
If you decide debt settlement or bankruptcy makes sense for your Pittsburgh business, choose your provider carefully. Look for companies that:
- Have extensive experience assisting businesses like yours
- Are upfront about all fees and costs
- Employ lawyers to advise on legal matters
- Maintain good standing with the Better Business Bureau (BBB)
- Have a proven track record of results
Avoid any provider that pressures you to make hasty decisions or pay large upfront fees. And don’t believe promises that seem too good to be true.Reputable Pittsburgh debt relief companies for businesses include:
- Steidl & Steinberg – Debt settlement, debt management, bankruptcy
- Thompson Law Group – Business bankruptcy lawyers
- Foster Law Offices – Bankruptcy assistance
Don’t Wait – Seek Help Today
The longer you wait, the harder it becomes to negotiate with creditors from a position of strength. If your Pittsburgh business is struggling with overwhelming debt, take action now to explore your options.Debt relief programs can help you settle or restructure what you owe and get your finances back on track. With the burden of debt lifted, you can focus on running a profitable business again.Don’t lose hope – solutions exist, even in the toughest situations. Reach out to a debt relief professional today to discuss your specific circumstances. With expert help, you can resolve debt, avoid bankruptcy, and set your business up for future success.