A Debt Settlement Attorney Can Help You Get Your Business Out Of Debt
When your business faces foreclosure, you may find yourself with serious legal and financial challenges for the secured creditors you owe.
Those creditors don’t want to risk unpaid debts or drawn-out legal proceedings, and you want to protect your best interests and minimize your losses and avoid business foreclosure. Whether it’s through asset liquidation or business bankruptcy proceedings, there are practical options to consider.
Here are a few practical strategies you might try when seeking debt relief from your secured business creditors.
What Is a Secured Business Creditor?
A secured business creditor is a lender you owe money to for secured loans, such as equipment loans or merchant cash advance loans. It is called “secured” because there is collateral that can be repossessed tied to the loan, called a lien. Unsecured debt, on the other hand, means there is no collateral for the loan, such as vendor debt or credit cards.
There are key strategies you can use to get business debt relief and avoid foreclosure; a debt relief lawyer can help you identify the best route for your situation.
Personal Liability and Business Debt Relief
Navigating business debt settlement is a complex undertaking that a debt settlement attorney can help you with. Business creditors holding larger amounts of debt can be more lenient because they know their ability to collect full sums of what they’re owed could be limited. Your business’s ability to repay also factors into what a business creditor will accept.
Debt relief attorneys can help you reach the best settlement terms for you and your business.
Selling Assets: A Quick Fix For Getting Out Of Debt
Selling collateral tied to the loan and using proceeds to pay it off is one of the quickest and most direct methods to prevent default and avoid unpaid debt. Whether it’s equipment, property, or inventory, liquidating non-essential assets can generate immediate cash to pay your secured business creditors. This is an opportunity to get business debt relief without legal action by prioritizing repayment for secured creditors.
Before initiating any sale, confirm that the amount you’ll receive will be adequate to pay off your debt. If you are underwater on your loan, consult a debt relief attorney.
How Selling Business Assets Affects You Personally
It is likely that you are personally liable for your business debt, as most of this debt is personally guaranteed. For example, a secured creditor has the power to put a lien on your home to reclaim what they’re owed.
An expert debt relief lawyer can help you sell business assets to ensure you have the cash to pay off your creditors and see the lien removed from your home. With the right lawyer supporting you, you may end up negotiating with multiple buyers.
Your creditors may offer to sell your assets, yet they typically don’t have experience garnering market value for your equipment. If you do decide to let your creditors sell your assets for convenience’s sake, working cooperatively with your creditors may present an opportunity to buy business assets back at a reasonable price.
More Debt Relief Solutions
Before you consider filing for bankruptcy, get help from an attorney well-versed in both bankruptcy and debt relief.
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Chapter 11 bankruptcy isn’t the most cost-effective for many businesses because of the fees associated with this option. However, if you file for Chapter 11 business bankruptcy, you can restructure your business and continue to operate it as an LLC. To fulfill your legal obligation, you’ll need to follow a court-ordered plan to repay your debts.
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You can also file for Chapter 7 bankruptcy to discharge most of your personal and business debts. This will require you to restructure your business as a sole proprietorship. In a sole proprietorship, there is no legal entity, and you and your business become one-and-the-same.
After you transition to a sole proprietorship, personal bankruptcy allows you to potentially keep up to $60,000 in business assets and continue operating. You could also choose to close your business entirely through Chapter 7 bankruptcy.
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Much like Chapter 7 bankruptcy, Chapter 13 allows you to keep up to $60,000 in business assets and remain open for business as a sole proprietorship. However, unlike Chapter 7, Chapter 13 requires you to settle with business creditors by making manageable payments over a three-to-five-year period.
Debt Relief Attorneys Guide You Through Uncertainty
Your business’s financial situation may feel difficult to manage, made even harder when secured creditors seek to safeguard their interests. Selling collateral to repay your loans, filing for business bankruptcy, or reorganizing your business as a sole proprietorship can help you get debt relief, as long as you have a debt settlement attorney on your side.
Partnering with a knowledgeable business debt relief lawyer ensures you have clear, strategic guidance at every stage of the process. If you live in the greater Denver area, The Wink Law Firm can help you choose the best strategies to avoid business foreclosure. Get started by filling out our online questionnaire.