Should You Hire a Business Debt Settlement Attorney? Pros and Cons, Explained

If your business has significant debt and you’re struggling to repay it, know you aren’t alone. According to Zippia, at least 70% of small businesses in the United States have some form of debt, whether it be loans, credit cards, merchant cash advances, or something else. Another independent news organization found the average small business debt to be about $195,000. Luckily, there are solutions available, including business debt settlement with the help of an experienced debt settlement attorney.

Understanding Business Debt Settlement

Business debt settlement is the process of negotiating with creditors to pay off your debt for less than you owe. It can be used for all sorts of business debt, including loans, credit cards, and merchant cash advances.

It may be worth considering if you aren’t able to pay off your debt as it currently stands. Using debt settlement, you can reduce the amount of debt you owe, often by agreeing to make a lump-sum payment or restructure the terms of your debt to make it easier to pay off.

Debt settlement can also be a way to stop costly late payment fees from racking up or stop the endless phone calls and/or letters from debt collectors. It can also help you avoid more serious legal action, such as a lawsuit (which can result in adverse judgments or wage garnishments) or even bankruptcy.

You can settle your business debt in several ways, including trying to do it yourself, working with a business debt settlement company, or enlisting the help of an experienced debt settlement attorney.

The Role of a Business Debt Settlement Attorney

If you’re considering debt settlement as a solution to your business debt, you may want to consider hiring a debt settlement attorney to help.

What Does a Business Debt Settlement Attorney Do?

A business debt settlement attorney is someone who represents you in your negotiations with your creditors or debt collectors. Your attorney will take over all communications with your creditors. Not only will you no longer have to speak to them yourself, but you can also stop the phone calls and letters.

Your attorney will also handle all negotiations on your behalf and can help create a settlement agreement. And in the worst-case scenario, where your debt settlement is unsuccessful, your attorney can represent you in a lawsuit or even help you file for bankruptcy.

Differences Between Attorneys and Debt Settlement Companies

A debt settlement company can provide some of the same services as a debt settlement attorney, including negotiating with your creditors on your behalf. However, there are some important differences.

First, debt settlement attorneys are held to certain ethical standards that other companies aren’t. The American Bar Association has guidelines in place regarding attorney competency, communication with clients, confidentiality, and more. Attorneys are also regulated by state agencies. While some debt settlement companies hold themselves to ethical standards, there is little industry regulation, and many people have poor experiences with them.

Another difference between attorneys and debt settlement attorneys is the scope of the services they can provide. A debt settlement company can attempt to settle your debt on your behalf. But if they’re unsuccessful, there’s little else they can do to help. They can’t represent you in a lawsuit or bankruptcy, for example.

Pros and Cons of Hiring a Business Debt Settlement Attorney

Pros

• Expertise and legal guidance: When you work with an attorney, you get the benefit of their expertise and legal guidance. They are well-versed in debt collection laws in ways that even a debt settlement attorney may not be.
• Negotiation skills: Debt settlement attorneys have plenty of experience negotiating with creditors, meaning they’ll likely have more luck than you would if you negotiated on your own.
• Scope of practice: Business debt settlement attorneys can help you if the debt settlement is unsuccessful and you’re faced with a lawsuit or bankruptcy.
• Protection from harassment: Unfortunately, creditors often use unethical tactics to collect debts. When you work with an attorney, you’re protected from harassment because the debt collector must speak to your attorney instead of you.
• Ethical standards: Attorneys must abide by certain ethical standards, ensuring a level of fair treatment and service you aren’t guaranteed with a debt collection company.

Cons

• Costs and fees: Hiring a debt settlement attorney requires paying attorney fees, which can be expensive, depending on the complexity of your situation. While it can save you money in the long run, it’s an added upfront cost.
• Time and involvement: Just because you’re working with an attorney doesn’t mean you can wipe your hands off the situation. You’ll still have to be involved throughout the process, including being prepared to provide information or documents your attorney requests.
• No guaranteed outcome: While working with a debt settlement attorney may increase your chances of a positive outcome, there are no guarantees. Your creditors could refuse to settle or could sue you to collect the debt you owe.

When to Consider Hiring a Business Debt Settlement Attorney

While a business debt settlement or merchant cash advance attorney isn’t right or necessary for everyone, there are some signs you should definitely consider hiring one:

• You can’t pay your debt: First and foremost, a debt settlement attorney can help if you’re unable to pay your debt. Your attorney can negotiate with your creditors on your behalf to try to settle your debt for less than you owe.
• You’re being treated unfairly: If you believe your creditor is using unfair or unethical debt collection practices such as harassment, an attorney can help.
• You’re being sued: If you’re being sued, it’s best to have representation from an experienced attorney. It may be more than you can handle yourself, and a debt settlement company can’t help you in the case of a lawsuit.
• You want the best representation: While a debt settlement company can be a suitable option in some situations, an attorney is preferable, thanks to their level of experience and expertise, as well as their ethical standards.

How to Choose the Right Business Debt Settlement Attorney

When you’re considering hiring a business debt settlement attorney, it’s important to find the right professional for your situation. Here are a few things to keep in mind when choosing an attorney:

• Look for someone experienced in your situation: A key benefit of hiring a business debt settlement attorney is their level of experience and expertise. To get the most out of the attorney relationship, hire someone experienced in situations such as yours.
• Get referrals from colleagues and other business owners: You can often find the best attorneys by speaking with colleagues and other business owners to get names of attorneys they’ve had positive experiences with.
• Evaluate their success rate: Ask your attorney about their experience and success rate. While they can’t guarantee your debt settlement will be successful, they can let you know the possible outcomes and how to prepare.
• Speak with several attorneys: Don’t necessarily hire the first attorney you speak with. It’s okay to speak with a few to find one you’re comfortable with. Many attorneys offer consultations for you to get to know them and learn if it’s a good fit.
• Read your contract: Before signing your contract, make sure to read the fine print and understand what you’re agreeing to in terms of services, fees, etc.
• Find someone you trust: Ultimately, it’s most important that you trust the person or firm representing you. Make sure you feel you can trust the attorney you hire.

Alternatives to Hiring a Business Debt Settlement Attorney

If you’re interested in alternatives to a business debt settlement attorney, here are a few avenues to try instead:

• Working directly with creditors: If you’d rather not hire someone to help you with your debt settlement (or you can’t afford to), then you can try to work directly with your creditors. You may be less likely to negotiate a settlement than if you hired a professional, but it’s still possible to get a good outcome.
• Utilizing debt settlement companies: A debt settlement company can help you negotiate with your creditors in a similar way as a debt settlement attorney. Just be cautious when choosing a company to avoid scams. And remember that if the debt settlement fails and the creditor sues you, you may still need to hire an attorney.
• Considering debt settlement alternatives: Debt settlement may not be the right solution at all. In some situations, something as simple as debt consolidation can help alleviate your debt burden and allow you to repay it. On the other end of the spectrum, you may need to consider more serious measures like bankruptcy. However, you would likely still want the help of an attorney.

Conclusion

Being in business debt often feels overwhelming, but it’s more common than you might think. While being able to repay your debts is the best-case scenario, it’s not always possible. In that case, debt settlement can help ease the burden. 

While there are several strategies for debt settlement, the best course of action is often working with an experienced debt settlement attorney who has lots of experience in this area and can help negotiate with your creditors or represent you in legal proceedings.

If you need to hire a business debt settlement attorney, we at Tayne Law Group can help. We offer consultations to help you decide if it’s the right choice for you. Call us at (866) 890-7337 or fill out our short contact form to schedule your free consultation.