subject: Small Business Debt Relief - How New FTC Laws Help Small Businesses Eliminate Debt [print this page] The financial crisis caused by Wall Street's reckless gambling has left almost everyone in an awful situation. However, it has hit small businesses particularly hard. It's become very common for banks to reduce the credit limit of small businesses down to the balance owed, which wrecks the credit of the owners by reducing the credit-to-debt ratio. It's a real vicious cycle for them: The more they act responsibly and pay off their debts as agreed, the worse off their credit situation becomes. As a result, small businesses can't get the loans they need to simply stay in business, much less to expand.
Understandably, a lot of small businesspeople are tempted to cut their losses and go out of business, or even go so far as to declare bankruptcy. But that is not the answer. As odd as it sounds, that's the easy way out. Small business owners owe it to themselves, their families, their employees and their communities to stay in business as long as possible.
But there is hope for small business owners who are stuck in this situation. The Federal Trade Commission (FTC) has created new laws and regulations that are designed to help small businesses more easily renegotiate their debts with their lenders so they can raise new capital. Recently, they announced that debt settlement companies can no longer charge up-front fees for their services and can only charge customers once the debts have been settled as promised. This is great news for small business owners who need to settle their debts because now they can have the confidence in the debt relief company they are using, whereas before there were dozens of fly-by-night "debt relief" companies that would charge as much as $2,000 up front for their services and would often disappear as soon as they received the money.
The types of small business debt relief are similar to personal debt relief. The first option small business owners have are debt consolidation loans, which is where a lender would loan them the amount they owe to their creditors and would charge a lower interest rate than the small business owner would otherwise pay. Another option would be to find a legitimate debt settlement company that will negotiate with their creditors to reduce the amount owed by either reducing the interest, reducing the principle on the debt, or a combination of both.
But bankruptcy is simply not an option for people who are concerned about their financial well-being in the long term. With the regulations passed a few years ago regarding bankruptcy, people who declare bankruptcy will still have to pay back a large portion of their debt, but will still have the black mark on their credit report. With that, the concerned small business owner might as well find a good debt relief company that will help them renegotiate their debt.
Small Business Debt Relief - How New FTC Laws Help Small Businesses Eliminate Debt
