Business debt can be used to expand a business, or to temporarily tide a company over during turbulent times. However, unexpected challenges can quickly cause business debt to spiral out of control. Instead of serving as a tool for growth, it begins to weigh the business down, hindering progress and threatening its stability.
That’s where business debt settlement companies come in. Using a variety of methods, they can help settle debts and let you as a business owner begin rebuilding again.
It’s critical to understand the different types of debt settlement companies, what they offer, and what the long-term effects of different debt settlement options are. We’ve compiled a list of the Top 4 business debt settlement companies to help you make the best choice based on your unique situation.
Business Debt Settlement Explained
Business debt settlement is a financial approach used by companies to address outstanding debts when regular payments become challenging. The company negotiates with creditors to settle for a reduced sum, as final payment of the debt. This is agreed upon by both parties. The process is commonly managed by debt settlement firms or legal representatives acting on behalf of the business.
The goal of business debt settlement is to help companies regain financial control, avoid bankruptcy, and clear debt that has become unmanageable. Creditors often agree to a settlement because they prefer to recover part of the debt rather than risk receiving nothing if the company goes bankrupt.
For example, a small business has $200,000 in unsecured debt (e.g., credit card balances, vendor invoices). The business has been facing cash flow problems and can no longer make the required payments. They work with a debt settlement firm, which negotiates with their creditors to settle the debt for $120,000, payable over a specified period. The creditors agree, realizing they may not recover the full amount otherwise. By paying the $120,000, the business eliminates the debt at a discount of 40%, freeing up cash flow to stabilize operations.
Or take the example of a small retail business that took out a $150,000 Merchant Cash Advance (MCA), repaying it through daily sales. When sales declined, the $5,000 weekly payments became overwhelming, pushing the business toward disaster. The business turned to a debt settlement firm, which negotiated the MCA debt down to $90,000, saving 40%. This allowed the business to regain cash flow and avoid bankruptcy, providing much-needed financial relief.
How Do Business Debt Settlement Companies Work?
Business debt settlement companies help businesses negotiate with creditors to reduce the total amount owed, allowing the company to pay off debts at a lower cost. The settlement process usually involves assessing the business's financial situation, negotiating with creditors for a reduced settlement, and arranging for a lump-sum payment or structured repayment plan. Business debt settlement companies generally offer:
- Negotiation: The company negotiates with creditors to settle for a percentage of the original debt.
- Cost reduction: Successful negotiations can result in a significantly reduced debt load, potentially around 40-60% of the original amount.
- Payment plan: The settled amount is usually paid either in a lump sum or through manageable installments, depending on the agreement.
These companies typically charge fees based on a percentage of the settled debt.
The Top 5 Business Debt Settlement Companies in 2024
After extensive research, we’ve curated a list of the Top 5 business debt settlement companies in 2024:
1. Coastal Debt Resolve
Overview
When it comes to business debt settlement companies, Coastal Debt Resolve is a leading specialist in business debt settlement, with a focus on Merchant Cash Advance (MCA) debt.
If you’re struggling with making payments to MCA lenders, you know how quickly things can spiral downwards as you get caught in a debt trap.
Coastal Debt Resolve provides a unique approach tailored to getting you out of the MCA debt trap. If you qualify for the program, you can expect:
- Immediate relief: Coastal Debt Resolve prioritizes keeping your business operations running smoothly through improved cash flow while working diligently to eliminate your debt completely.
- Flexible payments: Coastal Debt Resolve crafts payment plans tailored to strike the right balance between your financial capacity and the urgency of addressing your debt.
- Legal protection: Once enrolled, Coastal Debt Resolve provides you with access to top tier legal resources and protection through the attorney network, allowing you to focus on delivering value to your clients and growing your business without the stress of directly dealing with the legal consequences tied to your debt.
Pros:
- Increase cash flow upon sign up
- Reduce weekly payments
- Cut up to 80% off your MCA payments
- Ability to pay off completely in 6-18 months
- Comprehensive legal protection
- A dedicated Debt Settlement Advisor
Cons:
Currently only offered for MCA debt.
Key features
- MCA debt expertise: With extensive experience, Coastal Debt Resolve specializes in MCA debts, swiftly renegotiating inflated weekly payments for business owners.
- Network of attorneys: Coastal Debt Resolve has a nearly nationwide network of trusted attorneys ready to work on your behalf to successfully negotiate your business debt matters.
- Tailored debt solutions: Coastal Debt Resolve’s specialists craft customized repayment plans aligned with your business goals.
- Comprehensive support: Coastal Debt Resolve provides tailored repayment plans, emergency relief, and on-demand assistance to help businesses achieve debt-free status within 6 to 18 months, easing financial stress along the way.
Fees and costs:
Clients who successfully complete the program and settle their debts can expect significant savings. Often, those in good standing may realize savings of 57% on their total debt before program fees. When including the program's fees, these same clients may save around 27% over a period of 6-18 months. This approach offers a substantial reduction in overall debt while maintaining manageable costs throughout the process.
Who it may be best suited for:
Best suited to small businesses struggling with MCA debt.
2. Money Management International (MMI)
Overview
Money Management International (MMI) is a nonprofit organization offering a range of financial counseling services. They primarily offer debt management plans such as debt consolidation, debt repayment options for credit debt, credit counseling, and credit report reviews.
Pros:
- Also offers bankruptcy counseling and education.
- Good customer support.
- Good track record
Cons:
- Perceived limited transparency about their debt settlement options and associated fees.
Key features
- Debt management plans
- Credit card debt repayment
- Credit counseling
- Credit report reviews
Fees and costs
Fees and costs depend on several factors, and are not publicly available on the website.
Who it may be best suited for
MMI is best suited for individuals seeking nonprofit debt management services, particularly those with unsecured debts like credit card balances. It's ideal for those looking for structured debt repayment plans but may not be as suitable for those needing comprehensive debt settlement services.
3. CuraDebt
Overview
CuraDebt is a debt relief company specializing in debt settlement and management services, focused on consumer debt. They assist clients in negotiating settlements for unsecured debts, including credit cards, tax debt, and medical bills. CuraDebt also offers specialized services for those dealing with IRS tax liabilities.
Pros:
- Getting a savings estimate is free
- Offers a wide variety of debt settlement and tax relief programs.
Cons:
- Despite initial great reviews about customer service, recent reviews show a drop in the quality of support
- Focused on consumer debt, so may be less relevant for business debt
Key features
- Debt settlement programs specifically for tax debts.
- Specialized IRS tax relief services.
Fees and costs
CuraDebt charges between 15% and 25%.
Who it may be best suited for
CuraDebt is a good fit for individuals dealing with unsecured debts and tax issues.
4. National Debt Relief
Overview
National Debt Relief helps clients negotiate settlements for unsecured debts.
Pros:
- No upfront fees; payment is contingent on success.
Cons:
- Only available for unsecured debts, not suitable for secured debt.
- Can be high fees compared to some competitors.
Key features
- Debt settlement programs that help reduce the overall debt by negotiating with creditors.
- Clear timeline provided for debt resolution, usually within 24 to 48 months.
Fees and costs
According to the company, the average client usually pays a fee of up to 25% of the total debt enrolled.
Who it may be best suited for
National Debt Relief is ideal for people struggling with high unsecured debts and who are unable to keep up with minimum payments.
Pros and Cons of Business Debt Settlement
Pros of Business Debt Settlement
- Reduced debt load: Businesses can negotiate to pay a fraction of what they owe, sometimes saving 40-60% of their total debt.
- Avoid bankruptcy: Debt settlement offers an alternative to bankruptcy, helping businesses avoid long-term legal and financial repercussions.
- Improved cash flow: By settling for a lower amount, businesses can free up cash flow and use it to stabilize or grow operations.
- Negotiation leverage: Creditors often prefer settlement over receiving nothing in bankruptcy, so they may be more willing to negotiate.
Cons of Business Debt Settlement
- Credit impact: Debt settlement can negatively affect a company’s credit score, as creditors report the settlement as a partial payment (note this is often not relevant regarding MCA settlements though, as MCA transactions are not loans by definition in most cases).
- Potential tax implications: The forgiven portion of the debt may be considered taxable income, leading to an unexpected tax bill.
- Fees: Debt settlement companies typically charge fees, which can reduce overall savings.
- No guaranteed success: Creditors are not obligated to accept settlement offers, and the process can take time without assured results.
How to Choose the Best Debt Settlement Company for Your Business
To choose the best debt settlement company for your business, focus on these key factors:
- Reputation and accreditation: Look for companies with strong reviews and certifications from organizations like the Better Business Bureau (BBB).
- Transparency in fees: Make sure the company clearly explains its fee structure.
- Experience with business debts: Choose a company with specific experience in handling business-related debt.
- Customer support: Ensure they offer reliable and ongoing support throughout the process, providing clear communication about the progress of settlements.
- Niche knowledge: If you have MCA debt for example, consider a company like Coastal Debt Resolve that specializes in this area.
These factors will help ensure you select a reliable company that aligns with your business needs.
Meet Coast Debt Resolve: Easy, Fast, and Secure Business Debt Relief Solutions
Coastal Debt Resolve is the only business debt settlement company dealing with MCA debt that is accredited by the BBB with an A+ accreditation rating. With 100 team members, operating in 46 states in the U.S. and a 4.8/5 rating on Trustpilot, Coastal Debt Resolve has become synonymous with integrity and care for clients while empowering them to graduate MCA debt-free – all while significantly reducing overall debt.
Getting started is simpler than you make think
- Book a free, confidential consultation with a debt settlement specialist
- If eligible, Coastal Debt Resolve injects immediate cash flow into your business, giving time to negotiate an optimal debt solution for you
- Graduate debt-free in 6-18 months and secure your business's future
Summary
We looked at everything you need to know about business debt settlement companies, including how debt settlement works, pros, cons, and more. We listed the Top 4 debt settlement companies in 2024, including in-depth information and pricing structures. Business debt settlement may be the best option for you. If you decide it is, we hope this has helped. And if you’re struggling with MCA debt specifically, get in touch with the Coastal Debt Resolve team to assess your options, we’d love to help!
Disclaimer: The information provided in these materials is for general informational purposes only and is not intended as legal or financial advice. While we strive to ensure that the content is accurate and up-to-date, it should not be relied upon as a substitute for legal advice. Performance information may have changed since the time of publication. Past performance is not indicative of future results.
Frequently asked questions
Graduating MCA debt-free with Coastal Debt Resolve can take between 6 - 18 months. For other types of business debt settlement, it typically takes between 24 to 48 months to complete, depending on the amount of debt and the complexity of negotiations with creditors. Some settlements may be resolved faster, but it often takes time for creditors to agree to reduced payment terms.
Yes, you can negotiate business debt directly with your creditors. This involves contacting them to discuss reducing the debt amount or creating a more manageable repayment plan. However, using a professional debt settlement company can often result in better terms, as they have experience in negotiations and industry recognition.
Business debt settlement companies typically charge 15% to 35% of the total debt enrolled in the program. Always ensure that the fee structure is transparent before enrolling.
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