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What Business Debts Can Be Settled Through Debt Settlement?

If you run a small business, chances are you’ve taken on some debt along the way. Loans, lines of credit, past due invoices – it all adds up. And when business slows down or unexpected expenses come up, it can be tough to keep up with all those monthly payments.That’s where business debt settlement comes in. Debt settlement is a process where a company like ours negotiates with your creditors to reduce your total debt burden. The goal is to settle accounts for less than you originally owed.But not all types of business debt can be settled. So what debts are eligible for business debt settlement? Let’s take a closer look.

Business Loans and Lines of Credit

Some of the most common types of debt we help business owners settle are:

  • Small business loans
  • SBA loans
  • Business lines of credit
  • Business credit cards
  • Merchant cash advances

Virtually any loan or credit facility taken out in the business’s name is a candidate for settlement. The key is that these facilities were used to support business operations in some way.Personal loans or credit cards used for business expenses may also potentially be settled, but it depends on how they were structured.

Past Due Vendor and Supplier Invoices

If your business has fallen behind on paying vendors and suppliers, debt settlement can help here too. We can negotiate discounts on the total amount owed or set up payment plans on your behalf.Some examples include:

  • Past due bills from manufacturers and wholesalers
  • Unpaid contractor or freelancer invoices
  • Overdue shipping and logistics fees
  • Utility bills – phone, internet, electricity
  • Rent owed to landlords
  • Due payments to marketing or PR agencies
  • Unpaid subscriptions or software licenses

Essentially any business-related service where you owe money to another company is fair game for settlement. The key is getting your creditors to agree to settle for less than 100% of what you owe.

Taxes and Government Debt

One major exception is tax debt owed to the IRS or state tax authorities. Unfortunately the government does not negotiate tax settlements the same way other creditors do. But we may be able to help you set up an Installment Agreement or Currently Not Collectible status to manage past due taxes you can’t afford.The same often applies for other government-backed debts like SBA loans or penalties/fines owed to regulators. These require a different approach focused on proving financial hardship rather than negotiating a settlement amount.

Steps to Settling Your Business Debt

Now that you know which debts typically qualify for business debt settlement, let’s discuss the process briefly:

  • 1. Review your accounts – We’ll start by analyzing all your active business debt accounts and amounts owed. This helps us determine which creditors to approach first.
  • 2. Stop making payments – To negotiate a discount settlement, you’ll need to stop making monthly payments. This gives you leverage as creditors grow eager to collect. However we’ll first make sure your accounts aren’t at risk of immediate default or legal action.
  • 3. Open settlement negotiations – Once we’ve identified the best targets, our debt experts reach out to creditors on your behalf and start negotiating discounted payoff offers. Most accounts settle between 40-60% less than the original balance.
  • 4. Settle accounts – As creditors accept our settlement proposals, you’ll provide the agreed payoff amount and we ensure accounts get closed out and reported as “Paid in Full” rather than “Settled.”
  • 5. Repeat as needed – We’ll keep negotiating with creditors until all your business debt has been addressed to your satisfaction. Some accounts may take longer than others to settle depending on the creditor.
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The exact timeline varies by client, but our simple approach has helped thousands of business owners permanently resolve debt. On average most of our clients become debt free in 12-48 months.And the best part? Our services won’t cost you a penny until after we’ve successfully reduced your debt. Our fees only come from a percentage of the savings we achieve on your behalf.

Common Questions about Business Debt Settlement

If you still have some questions about the debt settlement process, here are answers to a few of the most common ones we get:What types of results can I expect from settlement?

  • For accounts less than 180 days past due, settlements of 40-60% off the balance are common. The more delinquent the debt, the deeper discounts we can usually negotiate.

How much does it cost to settle my business debts?

  • Our fees only come from a percentage of the savings we’re able to achieve for you. If we don’t settle an account, you don’t pay any fees on it.

Will debt settlement hurt my business’s credit?

  • Settling debt for less than you owe could negatively impact your business credit scores in the short term. However becoming completely debt free should raise your scores again over the long run.

Can I settle debt on my own without paying a company?

  • You can try contacting creditors yourself to negotiate settlements, but having professional guidance greatly improves your odds of success. Our experience settling millions of dollars in business debt gives us significant leverage in those negotiations.

How long before all my accounts are settled?

  • For most clients we’re able to resolve 80-90% of debt within 12-24 months. But every situation is unique, so we don’t make any guarantees on timing.

Will my creditors sue me during the settlement process?

  • To minimize legal risk, we’ll have you stop payments in a strategic order. As long as negotiations proceed responsibly, lawsuits are quite rare during our program.

Ready to finally take control of your business debt? Our dedicated advisors are standing by to help. Give us a call today at 212-210-1851 to discuss your specific situation. Or check out our website at for more information.With over 85 years of combined experience, our business debt experts can give you the personalized guidance and support you need. Let us help negotiate your debt balances down so you can get back to growth and profits!

Tax Debt vs Other Business Debt

Earlier we mentioned that IRS tax debt works differently than other business debts when it comes to settlements. Let’s explore this topic a bit more.The IRS has very strict rules in place for how much unpaid taxes can be reduced. While we may be able to secure discounts of 40-60% on most business debts, that level of reduction is essentially impossible for federal or state tax burdens.There are a few reasons why:

  • The government utilizes very aggressive, far-reaching collection powers that normal creditors lack. This limits a taxpayer’s leverage.
  • IRS penalties and interest accrue rapidly on unpaid balances. This makes it harder to negotiate a discount.
  • Settling tax debt for less than you owe has potential criminal implications. No creditor wants to be accused of cheating the government.
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Does this mean nothing can be done if you owe back taxes your business can’t afford? No! There are still options to manage tax debt appropriately:

Installment Agreements The IRS will often approve monthly payment plans based on how much a business can reasonably afford. This stops collections activity as long as you make on-time payments. While interest and penalties continue accruing, it helps avoid aggressive actions like wage garnishments or levies.

Currently Not Collectible Status If you can demonstrate extreme financial hardship and an inability to pay back taxes (even in installments), the IRS may temporarily classify you as “Currently Not Collectible”. This puts a hold on most collections efforts aside from annual reviews of your ability to pay.

Offer in Compromise In very rare cases where tax debt exceeds a business’s total assets and future income potential, you may qualify for an Offer in Compromise settlement. This involves extensive financial disclosures and usually requires expert assistance to navigate the complex application process.So in summary: no, you can’t settle IRS tax debt the same way you might other business loans or invoices. But options do exist to ease the burden if you work with an experienced tax relief professional. The key is being proactive, communicating with tax authorities early and often, and establishing your inability to fully pay.If you have outstanding tax debts for your business, let’s talk options. Call us today or visit our website to schedule a free consultation.

When Debt Settlement Might Not Work

While debt settlement can be extremely effective at reducing financial burdens for many small businesses, it isn’t necessarily the right solution for every situation.There are a few scenarios where attempting settlements could cause more harm than good:

1. Your accounts aren’t seriously delinquent If you’ve continued making at least minimum payments on all debts, creditors have little incentive to offer a discount. Debt settlement leverage stems from debts being 90-180+ days overdue.

2. You can afford monthly payments If cash flow allows you to continue servicing debts long term, settlement may not make sense. Workout programs from creditors could reduce interest rates without settling balances.

3. Legal action seems imminent If creditors have warned of imminent lawsuits or other collection efforts, waiting too long to settle debts could be risky. Proactive negotiation is key.

4. Your assets aren’t protected Certain business assets like commercial real estate or equipment could be seized if defaulted debts remain unaddressed. Equity must be preserved.

5. You plan to borrow again soon Settling debt could hurt your business credit. If you need financing to fuel growth in the near future, be cautious about impacting scores.

6. Debt burden is very small If you owe less than $10,000 total across all accounts, settlements may not be worth the administrative hassle and credit impacts.The key is analyzing your unique situation to determine if debt settlement makes strategic sense. Our expert advisors can guide you through this decision process during a free consultation call.

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How We Help With Business Debt Settlement

As you can see, business debt settlement is complex – assessing which accounts to target, coordinating negotiations across multiple creditors, avoiding legal risks. It’s A LOT to take on by yourself.But by partnering with a dedicated professional settlement firm like ours, the process becomes much more manageable.Here are some of the key ways we’ll support your debt reduction journey:

Strategic Account Analysis We’ll thoroughly review your complete debt portfolio – amounts owed, creditor details, delinquency status, asset risks, and more. This helps us identify the best settlements to pursue first.

Powerful Negotiation Leverage Our 85+ years of combined experience settling millions of dollars in business debts gives us significant credibility and negotiating strength across a wide variety of creditors and industries.

Tailored Settlement Proposals Every creditor gets a customized settlement offer designed specifically to resolve your unique situation as efficiently as possible. Blanket, one-size-fits all proposals are ineffective.

Ongoing Relationship Management We won’t just settle a debt then move on. Your accounts will be monitored throughout the entire payoff period to ensure the creditor upholds their side of the deal.

Meticulous Record-Keeping Throughout the settlement process, we’ll keep you updated with detailed reports on negotiation status, settlement terms, payments made, and more. You’ll always know where accounts stand.

Attorney Guidance If any legal issues do emerge during the process, our network of debtor-friendly attorneys can provide general counsel and advice on protecting your business interests.

Peace of Mind Most importantly, we’ll handle all the stressful back-and-forth communication with creditors for you. No more dreading calls from collectors while you try to run your company.Let us put our decades of combined expertise to work on permanently resolving your business debt burden. Schedule your free savings assessment today!

Other Business Debt Relief Options

Debt settlement can be extremely effective – but it isn’t necessarily the right fit for every small business owner. Several other options exist as well for managing financial challenges, each with their own pros and cons:Debt Consolidation LoansTaking out a new loan to pay off multiple existing debts.

  • Pros: Combines balances into one lower monthly payment.
  • Cons: Increases total debt owed. Just delays inevitable defaults.

Chapter 11 Bankruptcy ProtectionCourt-supervised reorganization plan to repay creditors over 3-5 years.

  • Pros: Immediate halt to most collections efforts and legal action.
  • Cons: Very complex and expensive process. Low success rate for small business owners.

Chapter 7 Bankruptcy LiquidationCourt-supervised surrender of assets to repay creditors as much as possible. Remaining debts discharged.

  • Pros: Wipes out eligible business debts entirely.
  • Cons: Assets may be seized. Significant long term business credit damage.

Out-of-Court Wind DownInformal business dissolution where owners use available cash to resolve debts on their own over an extended period.

  • Pros: Avoids formal bankruptcy process.
  • Cons: No legal protections from creditors seeking repayment. Unstructured approach.

As you can see, each approach has advantages and drawbacks. The key is aligning the solution to your specific goals and financial situation.Our expert debt consultants can help you compare all options during a free phone consultation. Call today or visit our website to schedule!


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