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Hi there, Michael Bovee with Consumer Recovery Network.
And I'm back to talk to you about negotiating and
settling business debt.
Most of our channel has been dedicated to how to
resolve consumer accounts that you can no longer afford to pay.
You can consolidate, whatever the case may be.
But now, I wanna talk about how to do that with a business.
I've had some bullet points that I've prepared.
I wanna touch on each one of these, but they're by no means
a comprehensive list of the kind of concerns that you have to
have when negotiating business debt.
There are some very different things that you have to think
about versus settling consumer debt.
So let's get started.
The first is whether or not your business is going to stay open,
or if it's closed, or closing.
The reason this is important is because other vendors,
suppliers that you may have.
Let's say, you negotiate a bank loan, pay it off for less.
That shows up on your Dun and Bradstreet listing, and you have
vendors and suppliers that might look at that, see that,
either current ones or ones in the future, and may not wanna
take a risk on lending to you or helping you stock your shelves.
So you have to be careful of the types of things that you
select for settlement or
whether you even do it at all if you're an ongoing concern.
If you're, say,
closed, obviously those things don't matter as much.
If you are winding down, say, you're just going into your slow
season, it wasn't a great high season, and
you don't know whether or not you're gonna make it to
late spring when things start picking up.
And you certainly can't continue to make payments and
afford them through those months.
So you have to do something, well, you don't have a choice.
Well, those decisions become easier to make because they're
not really being made, they're made for you.
But as you begin to think about winding the business down,
you can make some strategic decisions early
rather than later, and set yourself up for
success with negotiations, so it does matter.
Next is whether or not you personally guarantee an account,
and that's important.
Sometimes we forget, I've done it, right?
I open up a business account and I go into the bank and I give my
social security number as part of the application process.
They've ran my credit, along with the business, and
they've also included a clause in the contract, whether I read
it fully or just forgot about it, that I'm on a hook.
I personally guarantee you that if the business stops paying,
that I'm personally going to pay.
And that means that your personal assets are on the line
if you don't.
If you just blow off, you're closing the business,
you blow off the open credit lines that haven't been paid,
credit cards, whatever.
They can come after you personally, and do, actually.
And it's really popular, actually, with Wells Fargo,
Chase, Capital One, American Express,
these personal guarantees.
Next is size of debt, size matters.
The larger the debt, the more likely,
in my experience, to get more dynamic settlement results.
The smaller the debt, sometimes the settlement results aren't as
great, that's very consistent with consumer debts as well.
That I don't wanna harp on it too much but
I'll give you an example.
A couple months ago I did a business account, a file.
The business was winding down, it wasn't fully closed but
it certainly wasn't gonna remain open.
And there was a $197,000 business line
of credit that we negotiated with a debt collector, just on
the other side of the original creditor sending it to them.
The deal with the original creditor would not have been as
good as the one that we got with the debt collector and
sometimes that's the case.
Sometimes, you strategically decide who you're going to
negotiate with and get the best settlement from in advance.
So it's important to have that intel and
weigh all of those options and do the math, do the numbers.
Any liens or encumbrances on inventory or
property, real property, machinery, that kind of thing,
that matters in whether or not you look to settle a debt.
And you may have forgotten if there were UCC financing
statements that were filed along with the loan.
And you put inventory or machinery that you need to do
your job to stay open, you have to be very careful in whether or
not you choose to renegotiate terms, try and
negotiate a lower balance payoff, when there are liens
filed against a real property and inventory.
That's something we're very, very good at discussing with
you one-on-one so reach out to us on the hotline.
Affordability and settlement targets that are realistic.
So this is very similar to consumer data.
When you're negotiating business accounts, you need to know what
your targets are so that you can select the right accounts that
you're gonna settle or not settle if you're open.
And you need to know what you're realistically able, capable of
doing, or what these lenders, if you're closed, will settle for.
And then, whether or not you can do that with whatever you're
doing now, or the financial resources that you
have available to you either now or in the near future.
One of the biggest problems I find with people that call in,
sometimes they've read Internet articles, things that they've
come across, forums for example, and the discussion is about how
to settle for pennies on the dollar.
But pennies on the dollar doesn't happen.
I mean, it did at the height of the recession.
And it can if you're on a fixed income,
no asset kind of situation,
your collectibility score, if you will, is quite low.
But for most business owners, my experience is
is that pennies on the dollar is just not an option.
We can talk about those kind of issues in
the comments below the video here and on our website.
Actually, we have a pretty active page about
negotiating and settling business accounts on
the consumerrecoverynetwork.com site.
And then, of course, you have the hotline, call us.
Paying your deals.
Now, this is important because it's something that
people may not be aware of.
When you lump sum settle, and account for less than you owe,
sometimes there's terms available.
So depending on the creditor, depending on the circumstances,
depending on how long you've gone without paying and
whether you're dealing with a debt collector, or
even in litigation.
Sometimes, some pretty dynamic deals can be put together.
Where not only do you get the reduction of balance but
you also get time to pay, in some cases, 12 months or more.
And I'm not talking about renegotiating terms,
where you're paying back the full balance and
signing some new credit contract,
where you're still gonna pay the full balance back now over
a longer period of time because it's more affordable for you.
I'm talking about, say, settling the debt for half off and
getting 12 months to pay 50%.
That can make a deal that would have otherwise been
unaffordable.
You didn't have the sources to fund it.
Highly affordable and
more likely for you to be able to follow through on it.
So, you have to think about that as
that just sounds out of reach.
Actually, maybe not.
So, that's another factor that we can talk about.
There are a lot more details to cover about whether or
not you should try to negotiate business debts.
We can't cover them all in these brief videos,
that's why we wanna talk to you in the comments or on the phone.
One thing I'll leave you with is that, believe it or not,
Small Business Administration loans,
SBA loans are actually negotiable as well.
So if you're struggling to keep current with an SBA loan,
don't think that this isn't an option.
Reach out to us through the comments, on the hotline.
You can reach me, Michael Bovee, by pressing number two.
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