Can I Negotiate Down My Business Debt?
Most growing businesses take on debt at some point, but sometimes your debt can spiral out of control. If your business is based in New York, you have some options.
What Types of Business Debt Are There?
Business debt comes from multiple sources:
- Secured debts – loans like mortgages, equipment financing, and/or vehicle loans.
- Unsecured debts – loans like credit cards and/or personal loans.
- Leases – leases for business offices, machinery (like copiers, phone systems, and vehicles).
- Taxes – federal, state, and local government taxes like income, payroll, corporate sales taxes, and real estate taxes.
- Payroll – the actual compensation for employees and independent contractors.
- Basic Expenses – rent, utilities, and other monthly bills from various contracted vendors.
How Can I Get My Business Debt Under Control?
If you’ve already done your best to cut extraneous expenses and generate more business income, having a debt lawyer by your side can give you a few more options. The right debt attorney can review your contracts with your vendors and come up with a negotiation plan. Negotiations can include:
- Asking for more time to pay down your debt
- Requesting lower interest rates
- Reworking your contracts as to what you get for what you’re paying. You may be able to pay less for a lower level of service or may be able to pay your existing rate and get additional services.
- Asking to eliminate any additional charges or fees related to your debt, especially if you feel your current struggles are only temporary.
Additional Ways of Bringing Down Business Debt
Working with your debt lawyer, you can also negotiate with your vendor by:
- Asking for detailed breakdowns and justifications of amounts that seem high
- This works better where charges/services can be subjectively assessed.
- In certain areas, like mortgages, medical services, credit cards, etc., certain laws (like Qualified Written Requests for mortgages) require lender disclosure/cooperation.
- Disputing goods/services based on quality, timeliness, effort, time, benefit, necessity, etc.
- Make clear that if they can’t resolve issues you are having, you have the basis to litigate.
- Making clear that even though your business is currently going through a difficult time, you are willing to pay upfront for future goods/services if they are generous with forgiving old debts.
What Happens if My Lenders Don’t Want to Negotiate?
This is where having the right debt lawyers become really important. Your debt attorney can help you with the following options:
- Mediation or Arbitration – Sometimes you just need an impartial third party to be able to come to an agreement that both sides can work with.
- Litigation – And sometimes things can only be fought out in a courtroom. However, litigation can be a long, drawn-out process that can be extremely expensive. So even the threat of litigation can sometimes work as a tactic to move things back to the negotiation process.
- Also, if your debt lawyer has reviewed your existing contracts with your vendors, and has found any legal discrepancies, suing your vendors may be your best option.
- Bankruptcy – The last thing your creditors want to hear is that you are looking at bankruptcy – where they will only get pennies on the dollars you owe them. Even the threat of bankruptcy can get some lenders back to the negotiation table. And if your debts are far too large for you to manage, your debt attorney can help you through the bankruptcy process.
- You can declare personal Chapter 7 bankruptcy to clear any business debts that were attached to personal guarantees.
- If you want to reorganize/reduce your business debt, there is a new, easier version of Chapter 11 bankruptcy called Subchapter 5 that is less complex and was created for smaller businesses (read more about it here).
- Shutting Down Your Business – If you just can’t see the light at the end of the tunnel, you may be thinking about shutting everything down and walking away. However, things are never that easy. Certain debts can follow you after you close down the business, and some lenders may come after you for various allegations of wrongdoing. If you are ready to shut everything down, your debt lawyer will be able to guide you through doing things the right way, keeping your personal assets safe.
For more details about dealing with business debt click here.
What to Do Next
If you are struggling with overwhelming business debt and don’t know where to start, you need the right debt lawyer who can guide you through negotiations, litigations, or bankruptcy. Reach out to New York debt and bankruptcy attorney Ronald D. Weiss, P.C. for a free consultation. He can guide you through the available options for your specific needs. Ron can get the process started and will be at your side the whole time. Call 631-303-3765 and take the first step to a fresh start.