Often times, the worst
decision you can make, is the exact decision the creditor wants you to make.
Over the years we have seen many businesses attempt to negotiate on their own with very bad results. Negotiating is a profession. If you negotiate on your own, you'll be negotiating against
career professionals with experience. Debt negotiating is not like negotiating a contract or a bid for work.
You hire accountants, lawyers, surgeons and sub-contractors when it is important and you need the job done right. And that's why we suggest you hire us. Your business is on the line. One
mistake can be the end.
Mistake: Not knowing the full extent of your exposure
- How many ways and to what extent can creditors hurt you?
- Are you or anyone else personally liable?
- Are the debts secured by any of your assets?
- Can your creditors repossess them?
- Can you operate without certain creditors or are they vital to your business?
- Can they force you to spend money you don’t have defending a lawsuit?
- Can they freeze your bank account?
- Can creditors force you into bankruptcy?
Mistake: Not Knowing which threats to take seriously
Collectors will say just about anything to get paid:
- “We will report you to the IRS.”
- “We will seize your assets.”
- “We will sue you.”
- “We will repossess your equipment.”
- “We will force you into bankruptcy.”
- “We will have you arrested and put in jail.”
If you don’t know which threats are legitimate, it could cost you your business.
Mistake: Paying the wrong people too much or at the wrong time can put you on the fast track to
Who do you pay?
- the collector making the scariest threats.
- the creditor who calls the most.
- the creditor you’ve known the longest.
- the debt with the highest interest rate.
- the smallest creditors just because they are easier to settle and it cuts down on the number of creditors owed.
Mistake: Being caught off-guard when collectors play hardball
- They may tell you they’re coming to your business to list inventory.
- They may show up at your company and start taking pictures.
- They may call businesses near you asking if you’re still in business.
- They may start calling your family members and even neighbors looking for you.
- They may call your spouse or even your ex-spouse (if they are personally liable).
- They may try to convince your employees to give them your cell phone number.
- Some collectors call other creditors to inform them that you are not paying.
Mistake: Not understanding the law
- Are your business or personal assets subject to seizure?
- Are your wages subject to garnishment?
- Can your bank account be frozen?
- Can your equipment and other assets be repossessed?
- Could you be arrested or jailed?
Mistake: Not using your hardship as leverage
- Creditors are human and may settle if your hardship is properly presented and justifies the settlement.
- Creditors don’t want to “get beat”. If they’re going to reduce the debt and/or extend the payment terms, you’re going to have to give
them very compelling reasons why they should.
- By documenting your hardship, creditors can show the documents to their supervisors (who usually need to be involved in order to get the
settlement you need).
- A hardship is not just a sad story you tell over the phone!
Big Mistake: Trying to settle your debts quickly
- Your natural tendency is to want to resolve your problems as quickly as possible.
- Settling quickly may conflict with your primary goal of settling within your budget.
- Settling quickly eliminates a key element of your strategy; extending negotiations over time is what you need to do in order to satisfy
your creditors with what you can afford.
- Creditors don’t usually give the best settlements at first.
- Settling quickly for too much money could leave you with no money for the other creditors.
Mistake: Not creating your own settlement documents with terms that protect you.
- All settlements must be made in writing.
- Settlement terms must include the reference number, dates and amounts of each payment to be made.
- The total amount of settlement.
- A “grace period” is invaluable. You never know what the future holds. You may have to miss a payment here and there.
- Creditors may put in terms that can put you in a worse position if you default on the payment plan. They may try to make you personally liable or get you to give
them a lien against your assets, grant them a consent judgment or make you responsible for collection costs and legal fees.
Big Mistake: Thinking you can save your credit score
Your primary goal is to save your business, not your credit.
- Just because you’ve made payments on time does not necessarily mean your credit score is good.
- Chances are you don’t even know your credit scores or if you are creditworthy or not.
- What good is your credit score if you’re not going to borrow?
- You’ll probably have to sacrifice your credit in order to save your business.
- Don’t make a settlement just because a creditor says they’ll re-age your account or report you current.
Mistake: Overestimating your negotiating skill
You may be an expert in your field but you aren’t an expert in debt negotiation.
- You will be negotiating against professional collectors and attorneys that do this on a full time basis and often have years of
- Not having their experience or knowledge puts you at a serious disadvantage.
- Are you adept at the ins and outs of debt negotiating or are you going to “wing- it” with your business and financial future on the
Mistake: Not being physically and mentally ready to negotiate
- You will be dealing with relentless collectors who negotiate for a living.
- Are you able to handle the financial and emotional strain that is inevitable?
- Are you ready for the verbal confrontations that are bound to happen?
- If you are resistant to making or taking calls from creditors, you should not attempt it on your own.
- You have to be physically prepared to walk into battle while controlling your emotions or you are bound to lose.
Mistake: Not allocating enough time to negotiate properly
- Reaching settlements can take months or even years.
- It’s hard to get the right person on the phone.
- There’s a lot of time wasted waiting for call backs.
- It takes time to properly explain your situation.
- Your hardship must be documented and presented properly.
- Paperwork must be processed and filed.
- Payments must be scheduled and sent on time.
- Successful negotiations don’t happen in your spare time.
- Ask yourself: Is your time best spent focusing on your business or putting out fires?