When you set up a business of your own, it can be very difficult to manage the finances, especially if you are growing fast. Debt can mount up quickly and become unserviceable in case the business sees a slowdown or you can’t get money back into the system from your sales fast enough. Among the numerous ways of getting back on top, one is to engage in debt settlement negotiation with your creditors so that the total dues can be brought down to a manageable level saving the business from being closed down, assets being foreclosed or you filing for bankruptcy. However, to achieve a successful outcome, you need to understand the strategies that can be adopted to negotiate with creditors.

Effective Strategies That Can Liberate You from Business Debt

Leverage the Threat of Bankruptcy

Irrespective of whether your business finance is truly in such a dire state that you would need to file for bankruptcy, you hinting as much to the unsecured creditors can make them quickly pull out their calculators. Unsecured creditors lose the most in bankruptcy filings simply because they usually get nothing after the distribution to the secured creditors. This is a good strategy to adopt when facing credit card companies. When you start your negotiation you can suggest that they settle for around 15% of what is owed to them; while it is unlikely that this will be agreeable to them, averagely you can expect to settle for 30-50%. Business debt settlement to this extent can be achieved simply because, at the back of their minds, the credit card companies know that they would hardly get anything if your business goes belly up.

Promise to Settle With Cash Immediately

You are more likely to be able to settle with your creditors for less if you tell them that you are ready to pay up immediately a certain percent of the total dues if they agree. Since creditors also fully understand the futility and expense associated with protracted negotiations and handing over the debt to a collection agency, they will be more amenable if they can spot an opportunity to settle, even if they are likely to get less. Also, by agreeing to settle for a cash payment, creditors are able to avoid the uncertainty associated with small payments being made every month for a long period. Obviously, this strategy will work only when you have been able to amass an amount of money that makes commercial sense to offer immediately.


When trying to settle debt through creditor negotiation, it is very important that you are able to keep in mind the big picture even when you are negotiating with individual creditors. While the ultimate goal is to reduce your debt to zero, it is quite likely that it will not happen. Therefore, your intention should be to reduce as much debt as possible keeping in mind that it should be possible for you to pay off whatever is leftover with your current income. Unless there is a certain assurance of that happening, you will be no better off than before.

Author bio: Jonathan Atkins is a lawyer specializing in business debt settlement. A popular speaker and blogger on debt issues, he also teaches business law.