Temporarily Reduce Your Debt or Make a Compromise with Your Creditor

18 October 2018
 Categories: , Blog

If you currently own a small business and took out a loan when you first opened your establishment, it can be frightening to think that you may need to declare bankruptcy if you are having trouble paying back your loan. Instead of giving up on your business and damaging your credit rating with a bankruptcy, seek advice from an attorney who represents commercial owners who have taken out business loans.

Principal and Interest May Be Reduced

Be clear about your long-term goals when consulting with a debt consolidation attorney, such as James Alan Poe, P.A. If you believe in your business and think that in due time you will be able to pull yourself out of the financial rut that you have found yourself in, then let the lawyer know so they can provide you with options that will salvage your business.

It is best to use an attorney when dealing with a creditor because a legal representative knows the proper terminology to use when negotiating with a creditor. This will allow them to cut to the chase when discussing your current financial status so that a viable solution can be obtained before your loan goes into default.

If a creditor is willing, your loan's principal and interest may be reduced for the time being. This will make it possible for you to set some money aside that can be used for other bills needed to keep your business afloat.

If you choose this type of solution, revising your business plan will be necessary. Obviously, you will not want to wind up in hot water again, so cutting costs will be imperative so that you don't fall financially short when your loan payments are increased back to their normal amount. 

A Compromise Can Be Made Instead

A compromise can be made between you and your creditor that involves paying them off with a lower amount than what was previously borrowed. If your lawyer believes that doing so is in your best interest, you will need to provide proof that demonstrates that you are financially unable to pay the entire amount and that you are only going to be able to afford a set fee.

The creditor does not have to take you up on this kind of offer and may deny the amount that your lawyer presents. They may also counteract with a different amount and you will have the ability to say yes or no.

If an agreement can be made, you can pay what has been stated and will be exonerated from additional debt associated with this creditor. A clean slate will give you the freedom and flexibility to regrow your finances and operate your business in a more profitable manner.