[MUSIC] Hi there, Michael Bovee withConsumer Recovery Network.
And I'm back to talk toyou about negotiating and settling business debt.
Most of our channel hasbeen dedicated to how to resolve consumer accounts thatyou can no longer afford to pay.
You can consolidate,whatever the case may be.
But now, I wanna talk about howto do that with a business.
I've had some bulletpoints that I've prepared.
I wanna touch on each one ofthese, but they're by no means a comprehensive list of the kindof concerns that you have to have when negotiatingbusiness debt.
There are some very differentthings that you have to think about versus settlingconsumer debt.
So let's get started.
The first is whether or not yourbusiness is going to stay open, or if it's closed, or closing.
The reason this is importantis because other vendors, suppliers that you may have.
Let's say, you negotiate a bankloan, pay it off for less.
That shows up on your Dun andBradstreet listing, and you have vendors and suppliers thatmight look at that, see that, either current ones or ones inthe future, and may not wanna take a risk on lending to you orhelping you stock your shelves.
So you have to be careful ofthe types of things that you select for settlement or whether you even do it at allif you're an ongoing concern.
If you're, say, closed, obviously thosethings don't matter as much.
If you are winding down, say,you're just going into your slow season, it wasn'ta great high season, and you don't know whether ornot you're gonna make it to late spring when thingsstart picking up.
And you certainly can'tcontinue to make payments and afford them throughthose months.
So you have to do something,well, you don't have a choice.
Well, those decisions becomeeasier to make because they're not really being made,they're made for you.
But as you begin to think aboutwinding the business down, you can make somestrategic decisions early rather than later, andset yourself up for success with negotiations,so it does matter.
Next is whether or not youpersonally guarantee an account, and that's important.
Sometimes we forget,I've done it, right? I open up a business account andI go into the bank and I give my social security number as partof the application process.
They've ran my credit,along with the business, and they've also included a clausein the contract, whether I read it fully or just forgot aboutit, that I'm on a hook.
I personally guarantee you thatif the business stops paying, that I'm personallygoing to pay.
And that means that yourpersonal assets are on the line if you don't.
If you just blow off,you're closing the business, you blow off the open creditlines that haven't been paid, credit cards, whatever.
They can come after youpersonally, and do, actually.
And it's really popular,actually, with Wells Fargo, Chase, Capital One,American Express, these personal guarantees.
Next is size of debt,size matters.
The larger the debt,the more likely, in my experience, to get moredynamic settlement results.
The smaller the debt, sometimesthe settlement results aren't as great, that's very consistentwith consumer debts as well.
That I don't wannaharp on it too much but I'll give you an example.
A couple months ago I dida business account, a file.
The business was winding down,it wasn't fully closed but it certainly wasn'tgonna remain open.
And there was a $197,000business line of credit that we negotiatedwith a debt collector, just on the other side of the originalcreditor sending it to them.
The deal with the originalcreditor would not have been as good as the one that we gotwith the debt collector and sometimes that's the case.
Sometimes, you strategicallydecide who you're going to negotiate with and get the bestsettlement from in advance.
So it's important tohave that intel and weigh all of those options anddo the math, do the numbers.
Any liens orencumbrances on inventory or property, real property,machinery, that kind of thing, that matters in whether ornot you look to settle a debt.
And you may have forgottenif there were UCC financing statements that were filedalong with the loan.
And you put inventory ormachinery that you need to do your job to stay open, you haveto be very careful in whether or not you choose torenegotiate terms, try and negotiate a lower balancepayoff, when there are liens filed against a realproperty and inventory.
That's something we're very,very good at discussing with you one-on-one soreach out to us on the hotline.
Affordability and settlementtargets that are realistic.
So this is very similarto consumer data.
When you're negotiating businessaccounts, you need to know what your targets are so that you canselect the right accounts that you're gonna settle ornot settle if you're open.
And you need to know what you'rerealistically able, capable of doing, or what these lenders, ifyou're closed, will settle for.
And then, whether or not you cando that with whatever you're doing now, orthe financial resources that you have available to you eithernow or in the near future.
One of the biggest problems Ifind with people that call in, sometimes they've read Internetarticles, things that they've come across, forums for example,and the discussion is about how to settle forpennies on the dollar.
But pennies on the dollardoesn't happen.
I mean, it did at the heightof the recession.
And it can if you'reon a fixed income, no asset kind of situation, your collectibility score,if you will, is quite low.
But for most business owners,my experience is is that pennies on the dollaris just not an option.
We can talk about thosekind of issues in the comments below the videohere and on our website.
Actually, we have a prettyactive page about negotiating andsettling business accounts on the consumerrecoverynetwork.
And then, of course,you have the hotline, call us.
Paying your deals.
Now, this is importantbecause it's something that people may not be aware of.
When you lump sum settle, andaccount for less than you owe, sometimes there'sterms available.
So depending on the creditor,depending on the circumstances, depending on how long you'vegone without paying and whether you're dealingwith a debt collector, or even in litigation.
Sometimes, some pretty dynamicdeals can be put together.
Where not only do you getthe reduction of balance but you also get time to pay, insome cases, 12 months or more.
And I'm not talking aboutrenegotiating terms, where you're paying backthe full balance and signing some newcredit contract, where you're still gonna paythe full balance back now over a longer period of time becauseit's more affordable for you.
I'm talking about, say, settlingthe debt for half off and getting 12 months to pay 50%.
That can make a deal thatwould have otherwise been unaffordable.
You didn't havethe sources to fund it.
Highly affordable and more likely for you to beable to follow through on it.
So, you have tothink about that as that just sounds out of reach.
Actually, maybe not.
So, that's another factorthat we can talk about.
There are a lot more detailsto cover about whether or not you should try tonegotiate business debts.
We can't cover them allin these brief videos, that's why we wanna talk to youin the comments or on the phone.
One thing I'll leave you withis that, believe it or not, Small Business Administrationloans, SBA loans are actuallynegotiable as well.
So if you're struggling tokeep current with an SBA loan, don't think that thisisn't an option.
Reach out to us throughthe comments, on the hotline.
You can reach me, Michael Bovee,by pressing number two.