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Wisconsin Business Debt Relief Lawyers: A Helpful Guide

Dealing with overwhelming business debt can feel incredibly stressful and isolating. Many business owners in Wisconsin find themselves facing large amounts of debt through no fault of their own – whether due to economic factors, industry changes, or simply bad luck.

The good news is that there are experienced Wisconsin business debt relief lawyers who can help. This guide will provide an overview of debt relief options in Wisconsin, what to look for in a lawyer, and how the process typically works.

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Understanding Your Debt Relief Options

If your Wisconsin business is facing unmanageable debt, you essentially have two options: repaying the debt in full, or seeking some form of debt relief. Full repayment may not be realistic depending on your situation. Debt relief options include:

  • Debt Settlement: Negotiating directly with creditors to pay a lump sum that is less than the amount owed. This allows you to settle debts for pennies on the dollar.
  • Bankruptcy: Filing for bankruptcy stops collections and wipes out many types of business debt entirely. The most common type for businesses is Chapter 7 bankruptcy.
  • Debt Consolidation: Combining multiple debts into one new loan with lower monthly payments. This doesn’t reduce principal but can help cash flow.
  • Creditor Workout Agreements: Working with creditors informally to modify payment plans or terms until you can get back on your feet.

The right option depends entirely on your specific situation. An experienced Wisconsin business debt relief lawyer can objectively evaluate your debt and finances to determine the optimal path forward.

Finding the Right Wisconsin Business Debt Relief Lawyer

Choosing the right lawyer is critical – the stakes are high and you need someone experienced specifically with business debt issues. Here are important factors to look for:

  • Specialization in business debt relief: Not all lawyers have in-depth experience with the nuances of business debt problems. Look for someone who specializes specifically in assisting businesses with debt relief.
  • Strong track record: Ask about the lawyer’s background and success rate with cases similar to yours. Look for evidence of satisfied clients.
  • Local experience: Opt for a lawyer with extensive experience in Wisconsin courts and with local creditors. They will best understand state laws and norms.
  • Personable with good communication: You want a lawyer who is compassionate, understanding, and keeps you informed each step of the way. Make sure your communication styles mesh well.
  • Reasonable fees: Debt relief lawyers generally work on contingency or offer flexible payment plans. Get fee estimates in writing. Avoid any lawyers asking for large upfront payments.

Don’t rush your choice – take time to understand each lawyer’s qualifications and fit. This is your financial life, so make sure you feel fully comfortable and well-represented.

What to Expect During the Debt Relief Process

Once you’ve chosen a qualified Wisconsin business debt relief lawyer, here is a general overview of what to expect as they help negotiate your debts:

1. Strategy session – Your lawyer will conduct an in-depth review of your debts, assets, income, expenses, business operations, and goals. They will explain your options and recommend the optimal debt relief strategy.

2. Preparation – Your lawyer will have you gather financial documents, create budgets and projections, draft hardship letters, fill out forms, and undertake other preparation needed for debt negotiations.

3. Negotiations – The lawyer will contact your creditors and negotiate firmly on your behalf to settle debts, create payment plans, or file bankruptcy if needed. This may be an iterative process requiring multiple rounds of negotiation.

4. Settlement – Ideally the negotiations result in settlements that significantly reduce your debts. Written settlement agreements will be created and signed.

5. Implementation – You begin executing the debt relief plan, making any agreed payments, filing bankruptcy paperwork, etc. Your lawyer ensures everything goes smoothly.

6. Ongoing support – Your lawyer will provide ongoing advice and legal support as needed to help your business recover from debt.

The process can take anywhere from 2-12 months depending on complexity. Your lawyer will provide guidance and advocacy each step of the way.

Debt Settlement vs. Bankruptcy for Wisconsin Businesses

Two of the most common debt relief methods used by Wisconsin business owners are debt settlement and bankruptcy. How do you choose between them?

Debt Settlement

  • Negotiates with creditors to pay lump sums that are often 20-50% of balances
  • Allows avoiding bankruptcy and continuing business operations
  • Typically resolves debt in 6-12 months
  • Requires having cash available to pay settlements
  • Damages credit less than bankruptcy

Business Bankruptcy

  • Chapter 7 wipes out eligible business debts entirely
  • Stops collections and foreclosures immediately
  • Allows keeping necessary assets
  • Can liquidate company and walk away from all debt
  • Very damaging to business credit for years

As you can see, debt settlement is faster, preserves goodwill with creditors, and hurts credit less. But bankruptcy provides a more complete fresh start. An attorney can advise on which path fits your needs.

Protecting Your Assets During Business Debt Relief

A top concern when negotiating business debt is protecting your personal and business assets. Skilled business debt relief lawyers utilize various asset protection strategies, including:

  • Liens – Placing secured liens on property makes it harder for creditors to seize assets.
  • Trusts – Transferring assets to irrevocable trusts keeps them out of creditors’ reach.
  • Exemptions – Federal and Wisconsin laws exempt certain assets like retirement accounts.
  • Corporate veil – Incorporating can protect personal assets from business creditors.
  • Homestead exemption – Protects $75,000 of home equity from creditors under WI law.
  • Insurance – Having proper insurance like liability and bond insurance adds protection.
  • Accounts receivable – These can be protected by having customers pay to a lockbox.

Your lawyer will know additional strategies to legally shield your assets during debt relief. Don’t try to hide assets illegally – that can spur criminal charges.

Common Business Debts Eligible for Relief

Many types of Wisconsin business debt can potentially receive legal relief, including:

  • Credit cards – Business credit card debt from cards in the company’s name.
  • Accounts payable – Outstanding bills owed to suppliers and vendors.
  • Commercial mortgages – Mortgages taken out to purchase commercial property.
  • Equipment financing – Loans to purchase vehicles, equipment, machinery, etc.
  • Business loans – Money borrowed to fund operations, expansion, payroll, etc.
  • Unpaid rent – Back rent owed to landlords.
  • Unpaid taxes – Business tax debts including payroll, sales, and income taxes.
  • Judgments – Debts reduced to court judgments.
  • Personal guarantees – Personal debts guaranteed with business assets.
  • Utilities – Overdue bills for electricity, gas, phone, etc.

Virtually any lawful business debt can potentially be reduced or discharged altogether. An attorney can provide specifics on your debt situation.

Common Hardship-Based Defenses Against Business Creditors

When negotiating debt relief, Wisconsin business debt relief lawyers frequently cite hardship defenses to get better settlements from creditors. Common examples include:

  • Loss of major customer or contract – Argue this destroyed your revenue.
  • Industry decline – Your industry faces reduced customer demand.
  • Natural disaster – Severe weather, fires, or floods caused losses.
  • Employee theft – Dishonest employees caused uninsured losses.
  • Business interruption – COVID-19, power outages, etc. halted operations.
  • Key employee loss – The departure of a critical employee hurt your business.
  • Economic recession – A downturn created circumstances beyond your control.
  • Personal medical emergency – Health issues forced you to neglect business obligations.
  • Fraud by vendor or supplier – You lost money due to a vendor’s fraud.
  • Divorce – A divorce settlement harmed you financially.

There are many other possible hardship defenses based on your unique situation. Your Wisconsin business debt relief attorney will leverage applicable defenses to achieve the best possible settlements or debt discharge.

The Debt Relief Process for Wisconsin Small Businesses

Small businesses in Wisconsin make up 99.3% of all state businesses according to the SBA. The debt relief process contains some unique considerations for small business owners compared to large corporations.

  • Greater flexibility – Small businesses have more flexibility in their accounting and operations, allowing for creative debt relief solutions.
  • Personal involvement – With small businesses, the owner’s personal finances are often intermingled, requiring protection of personal assets.
  • Speed – Smaller businesses can sometimes negotiate debt relief faster than large firms mired in bureaucracy.
  • Bankruptcy costs – The legal and court costs of bankruptcy are proportionally higher for small businesses with less revenue.
  • Creditor goodwill – Local small business creditors may show more goodwill and willingness to negotiate relief.
  • Access to capital – Small businesses have a harder time accessing capital needed to fund debt settlements.
  • Recordkeeping challenges – Small businesses often have less organized financial records, slowing the process.
  • DIY risks – Small business owners are more prone to take risky DIY approaches versus hiring lawyers.
  • Personal stress – Debt problems create severe emotional stress for deeply invested small business owner.

Experienced Wisconsin small business debt relief lawyers understand these dynamics and guide clients through the process smoothly. Don’t go it alone – leverage professional help.

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