For those in desperate financial trouble, bankruptcy is not the only option. Business debt relief programs, also known as debt settlement, can help businesses relieve and eliminate debt.
Debt relief programs are offered by a credit counseling company that works on behalf of the borrower to reduce debts. The process involves negotiating with creditors to create a debt reduction plan that often leads to lower interest rates or reduced fees. It makes this program a good option for eliminating debt.
Debt relief or settlement programs can also help settle a substantial debt with a single or multiple creditors. Such programs are worth considering for those who find it difficult to keep up with their minimum payments or have fallen behind their payments.
Here you will understand the merits of business debt relief programs.
1. Get Out of Debt Faster
Compared to other debt-relief options, debt settlement is a faster way to become debt-free. A debt settlement program will help you repay your debts in two to three years. This is much less time than debt consolidation and credit counseling which have debt repayment periods from three to five years. Even if you use the original repayment schedule, it might take more than ten years to clear the debts, making debt settlement a viable option.
Also, the more funds you save before the settlement, the faster you will be able to resolve the debt.
2. Avoid Bankruptcy
One of the reasons for choosing debt settlement is to avoid bankruptcy. Bankruptcy can be costly, and you might have to lose some of your assets to repay your debts to creditors. The credit impact of bankruptcy is also severe, lasting 7 to 10 years. This can cause higher interest rates if you do get a loan.
Whereas in the case of debt settlement, it is less impactful than bankruptcy and allows you to keep your assets while allowing a comfortable repayment structure. Settling debts with creditors using a debt settlement program can help you avoid filing bankruptcy and prevent you from dealing with any severe consequences of insolvency. You will be debt-free in less time as long as you stick with the program.
3. Debt Reduction
A debt settlement program helps lower the amount of debt you owe, which can lift the burden of high debt levels. When creditors understand that you are not in a position to resolve your debts, they agree to forgive a sizable portion of debt rather than potentially getting nothing at all. This process of negotiating, however, takes months or few short years.
A borrower can get a reduction anywhere between 30% and 70% of the total outstanding debt. Negotiating a reduced amount helps you find financial relief and is also a primary benefit of any form of debt relief.
4. Cost-Effective
When you use a debt settlement program, you do not have to pay any upfront fees. The providers will take performance-based fees only once the debts are settled. Also, with debt settlement, you only pay back the actual debt you owe, eliminating interest charges and penalties in the final settlement. This makes debt settlement a cheaper option for borrowers than other debt relief methods.
5. Professional Financial Help
Negotiating with creditors requires experience and skill. Not every borrower may have the expertise to negotiate with creditors to overcome debt. A debt settlement program involves getting help from financial professionals who will negotiate with the creditors. The creditors may ask either a single lump-sum payment or set up a payment plan for the agreed debt settlement amount.
6. Get Creditors off your Back
Getting harassed by creditors and collectors can leave anyone stressed. A debt settlement program can put an end to the calls by creditors, allowing you to resolve the debt. Borrowers will not be chased by creditors and sued over a settled debt. Most of the borrowers opt for this method of debt relief because they are tired of being harassed by creditors, and resolving their debt through negotiation helps them regain their peace of mind.
7. Simplifies the Debt Payment Process
Debt settlement is a simple process and requires the borrower to take the services of a provider who negotiates with the creditor to settle for an amount less than what is owed. People who do not have time for negotiations can settle their debts using this simple process.
After understanding the merits of business debt relief, you might find it a suitable option. Depending on your financial situation and with the help of a financial professional, you can decide the best solution for you.
