1. 12 Mistakes to Avoid
How to Negotiate Business Debts

2. 12 Mistakes to Avoid: How to Negotiate Business
Debts
When business owners are faced with a financial crunch
many have no clue how to negotiate business debts when
creditors start calling and demanding payment.
These 12 simple steps will help business owners negotiate
with their creditors effectively and minimize disruptions to
their business operations.

3. 12 Mistakes to Avoid: How to Negotiate Business
Debts
Business Debt Mistake# 1: Alienating Your Creditors
When a creditor calls you on the phone, one of the worst things you can do
is avoid their calls. It’s a normal reaction because you do not want to tell
them that you do not have the funds to pay them. However, what's
worse than telling them you cannot pay is leaving them in the dark by
ignoring their calls and letters.
Creditors understand that clients will fall behind in their payments in the
course of doing business. If you do not have the funds, it is best to tell
this upfront. By doing this, it can open up opportunities to create other
ways to paying back the debt such a setting up a payment plan or
negotiating a lower debt settlement.
One thing to remember though, never make promises that you know you
cannot keep. Do not accept a payment plan that you know you will not
be able to sustain. If there is no solution that can be agreed to it is best to
leave it at that and come back another time to resolve the matter.

4. 12 Mistakes to Avoid: How to Negotiate Business
Debts
Business Debt Mistake# 2: Thinking You Can Save Your Credit
Score
Unfortunately, when your business is struggling financially and
behind on its debts and when some of these debts are tied to your
personal credit, trying to save you credit score is usually wasted
effort.
Your number one goal should always be to save your business; to fix
whatever problems your business has, not to save your credit.
One of the tricks creditors do is try to entice you to pay and in
return will not report you to the credit bureaus in an effort to
save your credit score. It may be tempting but could be very
detrimental to your business especially if that cash is badly needed
to keep your business operating.

5. 12 Mistakes to Avoid: How to Negotiate Business
Debts
Business Debt Mistake# 3: Not Knowing the Full Extent of Your
Exposure
Ask yourself these questions:
1. Are you or anyone involved in the business personally liable?
2. Are the debts secured by any assets and can it be repossessed?
3. Can your business operate without certain creditors? Which creditors
are vital to the survival of your business?
4. Can you afford to defend a lawsuit?
5. Can they freeze your bank account?
6. Can they put you in bankruptcy?
Knowing the answers to these questions will help you to determine exactly
where you stand when you're negotiating your debts with your
creditors. It will also help you prioritize which creditors are the most
important, in terms of requiring your utmost attention.

6. 12 Mistakes to Avoid: How to Negotiate Business
Debts
Business Debt Mistake# 4: Not Putting Together a Debt
Explanation File
This debt explanation file is for your creditors benefit. This file
will contain the following:
1. Hardship letter – This letter is to explain to your creditors
the reasons why you are unable to make payments.
2. Company Financial Statement
When requested, you send this file to your creditors. At times,
when your creditors are made aware of what’s going on with
your business they are more likely to work with you rather
than harass you.

7. 12 Mistakes to Avoid: How to Negotiate Business
Debts
Business Debt Mistake# 5: Overestimating Your Debt
Negotiation Skills & Knowledge
Many business owners think that they are up to the task when it
comes time to negotiate their debts with creditors. And creditors
hope that this will be the case.
Creditors always employ the use of professionals such as attorneys
and debt collection agencies. These are people trained in
negotiation tactics and they count on business owners believing
they can handle it themselves.
You need to be honest with yourself to know if you truly can handle
negotiating with these professionals or not. If you cannot, then
you need to consider having professionals to represent you in the
matter.

8. 12 Mistakes to Avoid: How to Negotiate Business
Debts
Business Debt Mistake# 6: Not Being Physically & Emotionally Ready to
Negotiate
When your creditor begins a full collection assault against you, expect relentless collection
calls from the creditor or their agents.
You see unlike with personal debts where collection agents have to abide by the FDCPA
(Fair Debt Collection Practices Act) rules, with commercial debt none exists. This
means they can call anytime they want day and night and can be as harassing as they
want to be.
Here is an excerpt about why the FDCPA does not cover business debts:
"Congress believed and continues to believe that those who owe business or commercial debts are
sophisticated enough to withstand or at least not be as threatened when faced with business debt
collection abuse or harassment. Thus, the FDCPA does not protect a person who is alleged to owe a
business or commercial debt. A business who believes it is being abused or harassed in the collection
of business debt should consult creditors’ rights or debtors’ rights corporate attorney."
If you're not able to handle the barrage of calls from them, physically or mentally it’s best
not to take them on. You're not alienating them; if you've already spoken to them at
least a few times a week and there is no change in your business finances, then their
continuous calls is merely to harass you into paying.

9. 12 Mistakes to Avoid: How to Negotiate Business
Debts
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