Archive for the ‘Business’ Category

These are tough economic times for businesses.  As debt approaches critical mass, business debt settlement has become a critical concern for both businessmen and individual consumers.  For businesses, debt settlement offers a viable solution to bankruptcy.  It also offers some advantages to creditors.  That is why business debt settlement is often preferable to bankruptcy, because both the debtor and the creditor agree on a reduced balance as payment in full.  This spares the considerable cost and delay of court proceedings, which can be catastrophic to both parties.  It can also benefit the creditor by placing him in a position to recover a larger portion of the debt in a timelier manner than would otherwise be the case.  The debtor may also be in a more favorable position and be able to continue in business as long as the terms of the agreement are observed and payments are made on schedule.

Debt is as old as business and the settlement of debts have been practiced for thousands of years.  Ancient settlement strategies involved the proverbial “pound of flesh.”  The debtor could literally forfeit his life unless a settlement could be reached.  As timed marched on, more enlightened solutions involving placing debtors in prison and selling off family members into slavery.   Eventually, bankruptcy laws allowing creditors to recover what they could of the debt, but providing basic protections for the debtor and protecting him from further fines, fees and penalties replaced these practices.

The move to deregulate banks in the US during the 1980s and 1990s led to a period of relaxed consumer lending practices followed by a recession and a wave of bankruptcies and unresolved debts.  Banks faced unprecedented charge offs of this new wave of debts and responded by organizing debt settlement services in hopes of recovering a greater percentage of debts than they would have through bankruptcy proceedings.  One of the more successful strategies was debt consolidation.  All of the debtor’s obligations were rolled into one repayment plan calibrated on the client’s ability to pay.  This allowed the business to continue to operate and earn money.   The same strategy was also successful with individual consumers and is still in use.

Economic fluctuations including the current downturn have spurred development of professional services, which can assist businesses and individuals in settlement of their debts.  There are a number of reputable and established companies in this growing new field.  The best companies are members of The Association of Settlement Companies or TASC.  Independent third parties for their competence, professionalism and ethical standards have evaluated members of TASC.  Their personnel will usually include arbitrators who are certified by the International Association of Professional Debt Arbitrators, the IAPDA.

Although debt settlement is not yet classified by the Better Business Bureau as a profession, most TASC companies belong to the Chamber of Commerce.  If your business is in need of professional debt settlement services, you will find more information with the Chamber of Commerce in your locality or with the US Chamber of Commerce than with the Better Business Bureau.  TASC provides reliable information on qualified companies on its website. The United States Organization for Bankruptcy Services, or USOBA, can provide reliable, timely information on this emerging profession.  USOBA also has a website with information about debt settlement and the services provided by individual professionals and organizations.

These days even well managed businesses can find themselves in economic trouble.  For a long time, bankruptcy was the only solution.  That involved the courts and resulted in legal rulings, which provided some, basic protection for the debtor and allowed the creditor to recover a portion of the debt. It was an expensive, slow, complicated procedure, however, and it often crippled the businesses to the point where they failed completely due to under-capitalization and a consequent inability to comply with all the terms ordered by the court.  Creditors often recovered little or nothing.  It was a system in which nobody won.

Debt settlement offers an alternative to bankruptcy, which can be quicker, less expensive and more equitable for all parties involved.  The economic volatility our country has experienced during the last few years has spawned a new profession, which can help both parties reach an equitable settlement.  Even though these are tough times for businesses, there is help available so that you can avoid bankruptcy.  If they are unable to help you, reputable debt settlement professionals will not charge a fee and you will still have the option of bankruptcy.