It is not recommended to handle debt negotiations on your own. Debt is menacing and getting the support of your family and friends helps relieving that stress of debt. In fact, the best way to negotiate debt is to hire consultants who can communicate and manage lenders to arrive at a helpful debt settlement.
The handling of debt at its initial stage makes it easier to settle. Lenders should not be ignored, as that would worsen the situation. Do not keep postponing to explain your present financial position to creditors.
Since it is in the interest of all concerned to get a solution, the lenders would do well to cooperate with the businesses to reduce the rates of interest, extend the line of credit and streamline the debt situation. Dealing with a number of creditors drives your focus away from your business. Debt consultants of good reputation are competent to negotiate with creditors and resolve debts for amounts smaller than what is actually owed.
Creditors are scared that they might lose the loaned amount for good. Moreover, they are keen not to show debts in their books of account, and they would be willing to negotiate the debts. They are aware that they have a chance to get back a part or all of their loaned amounts.
The borrowers should be ready to pay some money at the start of the negotiations, as the lenders would like some reasonable percentage of loans to be paid upfront. Otherwise, they may even refuse to negotiate. It is at this point that a competent and experienced negotiator can help the business by negotiating for a smaller upfront amount.
When creditors are paid through a bank account or a credit card, they get informed of the debtor’s banking status. In case the owner is sued in the meanwhile, the creditor, by getting this information, can access the owner’s funds. To avoid that eventuality, it is best to pay the debts through money orders, thus keeping sensible information secured.
Creditors would be willing to accept a lower amount, as they are assured of getting back s part of their funds. Most often, business owners can expect to pay an amount lower that what is owed. However, they should insist that the debt should be reflected as totally paid in the account books. The language used for this purpose is ‘fully paid’ or “debt satisfied”, as no business owner would like the word “debt” to appear in their books.
Owners should never agree to pay an amount that they can’t afford. They should inform the creditors of what they can pay, and see what the demands of the creditors are. The lenders very well understand that, once the business is declared bankrupt, they won’t get any payment whatsoever.