Settling Small Business Debts Claims

Settling Small Business Collection Claims

Small business owners will often have to deal with debt related issues, be it customers who refuse or cannot pay their debts as well as repaying their own business credit cards and loans. In either of these cases, there are situations where settling a business debt for less than the original amount owed makes sense for both parties. Working with a business debt settlement lawyer can help.

a pen and calculator sitting on a desk

Collecting on Customer Debts

While the majority of your customers will pay on time and in full, there will be occasions when you and your business will have to deal with overdue invoices and outstanding payments. Collecting those debts requires knowing what kind of steps to take, and what measures you’re allowed to employ.

Types of Debtors

The first step in determining whether you should offer a lower payment to settle a business debt is to identify which type of debtor you’re dealing with. There are different categories of debtors that may apply, as follows:

  1. A customer that will do anything to avoid paying.
  2. A customer that owes several debts and pays sporadically.
  3. A customer that typically pays on time but is having financial trouble.  

Your settlement strategy may change for each debtor as well as other factors such as the nature of the relationship and the amount of the debt owed. Join LegalShield and a small business debt provider attorney can guide you through the settlement process with advice on the best course of action.

Three Types of Debtors
How Much Should You Settle For?

How Much Should You Settle For?

If you decide that settling for less than owed is a good option, you need to think about the amount you would be willing to accept as well as whether the repayment will come as a lump sum or through a payment plan. There are several factors that you can weigh. 

  • Do they owe you for a physical product or services? Have you fully delivered?
  • What were the hard costs to deliver the product or service?
  • What is the nature of your relationship with the debtor? Do you want it to continue?

Every financial situation is different and it’s wise to consult with an attorney experienced in debt settlement. with a LegalShield membership, you can have your provider attorney help you draft the appropriate debt settlement paperwork once you’ve come to an agreement.

Repaying Business Loans

Running your own business often requires taking on loans to finance your growth or expansion. In turn, being responsible for your company’s financial situation means understanding the types of loans available and understanding the terms of repayment — and what you can do if you can’t repay them according to the agreement.

man sitting on the floor surrounded by piles of financial documents

Types of Loans

Based upon your needs and your credit, there are several different types of business loans or financing you can seek, including (but not limited to) term loans, SBA loans, a business line of credit, and business credit cards. Depending upon the type of loan and the institution, these loans can be secured by collateral or unsecured, but either way, the lender expects repayment based upon the agreed-upon terms and schedule.

If you’re struggling to repay a business loan, a debt collection attorney can help you in dealing with  lenders or debt collection agencies. In addition to negotiating with creditors and agencies for debt relief, either by a reduced loan principle or an extended timeframe for repayment, an attorney can prevent threatening or harassing behavior from debt collection agencies. If you’ve already been sued by a creditor over your unpaid debt, a small business debt provider attorney can represent you and present any defense or counterclaim you may have against the other party. 

Attorney vs. Debt Settlement Company

If you’re looking for outside help to collect outstanding debt, you have a choice between debt collection agencies and debt collection attorneys. 

  • A debt collection agency is a company that specializes in collecting debts, often by either buying debts from other businesses or working for a portion of the proceeds. 
  • A debt collection attorney works for a creditor in seeking repayment of a debt, negotiating repayment with debtors and taking cases to court if necessary. 

While both are capable of achieving your aims, there are drawbacks to working with an agency over an attorney. As part of the terms of your agreement, you may be paying a hefty portion of the outstanding principal to the agency, leaving you with less to show for the trouble. And given that agencies have considerable incentive to collect that debt, and as much of it as possible, some less-than-scrupulous ones may engage in behavior that constitutes harassment under the laws protecting debtors, which may tarnish your reputation by association. 

With a debt collection attorney, you can be sure that your company’s representative is working within the law and within your directives for how you want to approach the situation. That means your attorney can handle the phone calls and letters you would otherwise have to do yourself, and can work to negotiate a lump sum or monthly payments or other repayment plan with a debtor to avoid missing out on repayment entirely or having to take the case to court.

Civil Litigation
Have an Attorney Settle a Debt For You

Have an Attorney Settle a Debt For You

Keeping a cool head when you’re in the middle of a dispute over money is not easy. That said, remaining calm and being reasonable can help you during the process.  
Whether your business is owed money or another entity is claiming you owe them money, having an attorney handle the settlement negotiations can not only lead to a positive outcome, it can reduce your stress. 
If you join LegalShield, you can be on the phone with a provider attorney in as little as 4 hours. If appropriate, your provider attorney can write a letter or make a phone call on your behalf to seek to settle the situation for you at no additional cost.

How a LegalShield Small Business Plan Works for Debt Settlement

Your business pays a small monthly fee starting at $49.00 per month and gets legal advice, document review and attorney services you can use to settle debt collection cases faster.

Al Scott Photography
Texas Member
Dear LegalShield, I am writing you this letter to say thank you for all of your assistance. I am a professional photographer by trade and I have used LegalShield for everything from trademarking advice to collecting outstanding debts from clients. All in all, I can't believe the help and advice that I have received for such a reasonable fee, the service has more than paid for itself and it is priceless to have someone that I can talk too fast with knowledgeable legal advice. Thank you.
Get Help With Debt Settlement
Plans Start at Only $49.00 Per Month

Key Features of Our Small Business Legal Plans

LegalShield’s business plans can help you in the following areas.