Jacksonville Business Debt Relief Lawyers – Helping Companies Find Solutions
Debt is an unfortunate reality for many businesses today. Whether due to unexpected circumstances, cash flow problems, or other issues, companies can find themselves facing large amounts of debt that seem impossible to repay. This is where working with an experienced Jacksonville business debt relief lawyer can make all the difference.I know – debt feels scary. Believe me, I’ve been there! But the good news is there are options and a knowledgeable attorney can help you find the best path forward. Don’t lose hope! With some strategic planning and negotiation, you can get your business back on track.In this article, we’ll cover some of the main debt relief strategies and laws that Jacksonville business lawyers use to help companies in debt. I’ll try to explain things in simple terms, so you have a good understanding of the pros and cons of each approach. My goal is to empower you with information, so you can make the smartest choices for your unique situation.Ready? Let’s dive in!
Debt Settlement
One common approach Jacksonville business debt relief attorneys use is debt settlement. The basic idea is negotiating with creditors to pay a lump sum that is less than the full amount owed. This can be an attractive option, but there are definite pros and cons to consider:Pros:
-- Settle debt for less than you owe – This lets you resolve debt by paying a fraction of the full amount. Depending on factors like age of debt and your leverage, settlements of 50% or less are possible.
- Avoid bankruptcy – Debt settlement allows you to avoid the severe consequences of bankruptcy, which include damage to your business’s credit and reputation.
Cons:
- Potential tax implications – The IRS may count the amount of debt forgiven as taxable income. An attorney can help you minimize this.
- Credit score damage – Debt settlement leads to creditors reporting “settled for less than full balance” which hurts your credit. This may not be a big concern if your credit is already poor.
- Collection efforts continue – Creditors may still pursue collection efforts like lawsuits during negotiation. Your attorney handles defending against these efforts.
- Fees – Debt settlement firms often charge 15-25% of amount settled. This reduces the savings, so compare firms carefully.
The key to success with debt settlement is working with an attorney experienced in negotiating with business creditors. They have relationships and leverage to get optimal settlements. Be wary of non-attorney debt settlement companies – they can’t provide legal protections.
Chapter 11 Bankruptcy
For some businesses overwhelmed with debt, Chapter 11 bankruptcy may be the most viable option. This allows a company to restructure and modify debt through a court-supervised process. Here are some key points about Chapter 11 bankruptcy:Pros:
- Pause collections & lawsuits – The automatic stay stops creditors from pursing collection efforts during bankruptcy.
- Modify debt & contracts – Debt and contracts can be modified to create more affordable payment plans. Secured debt can be reduced to the value of collateral.
- Operate business as usual – Existing management typically stays in place and the business continues operating during restructuring.
Cons:
-- Complex & expensive – Chapter 11 is a complex process requiring experienced legal counsel. Attorney fees and other costs can be substantial.
- Risk of liquidation – If restructuring fails, a Chapter 11 case can be converted to Chapter 7 liquidation. This leads to business closure and asset sell-off.
- Credit & reputation damage – Like all bankruptcy, Chapter 11 hurts the business’s credit and reputation. Vendors may change credit terms.
Chapter 11 bankruptcy allows a struggling business to rework obligations and emerge healthier. But the process requires expertise to navigate and does entail reputation costs. An attorney can advise if it is preferable to debt settlement or other options.
Florida Consumer Collection Practices Act
For businesses facing aggressive debt collectors, Florida’s Consumer Collection Practices Act (FCCPA) provides important protections. Some key provisions include:
- Prohibits harassment or abusive conduct by collectors
- Restricts when and with whom collectors can communicate
- Limits collectors to one phone call per week without express permission
- Prohibits unfair publication of debtor lists
- Allows debtors to request validation of debts and dispute inaccuracies
Violations of the FCCPA can lead to collectors being fined and business owners receiving statutory damages. An attorney can help enforce your rights under this act.
Fair Debt Collection Practices Act
The federal Fair Debt Collection Practices Act (FDCPA) also regulates collector conduct. It overlaps with and complements the FCCPA. Some examples of prohibited practices under the FDCPA:
- False statements about a debt’s amount or legal status
- Misrepresenting identity or threatening actions that cannot legally be taken
- Calling outside permitted hours (8am-9pm)
- Contacting third parties about a debt without permission
- Using obscene/profane language or repeatedly calling with intent to harass
Like the FCCPA, violations of the FDCPA can lead to fines for collectors and statutory damages for business owners. Having an attorney well-versed in consumer protection laws can be invaluable in stopping unfair collection practices.
-Strategic Bankruptcy Chapter Filing
One technique Jacksonville business debt relief lawyers use is strategically filing under different bankruptcy chapters to maximize benefits. For example:
- Filing Chapter 11, then converting to Chapter 7 if restructuring fails. This avoids liquidation without attempting restructuring first.
- Filing Chapter 7 for one business entity while using Chapter 11 for related entities. This contains liquidation damage while allowing restructure of other entities.
- Filing Chapter 7 for sole proprietorship business, while protecting personal assets with Chapter 13. This avoids liquidating personal assets.
The optimal approach depends on your unique situation. An attorney experienced in multi-chapter filings can help devise the most strategic plan. Just beware of increased legal fees from multiple filings.
Defense Against Creditor Lawsuits
If creditors have filed lawsuits over unpaid debts, a knowledgeable business debt relief attorney can defend against these actions. Possible defenses include:
-- Statute of limitations – If the debt is too old, the lawsuit may be past Florida’s statute of limitations for debt collection. This can get the case dismissed.
- Improper service – If you were not properly served notice of the lawsuit, the case can potentially be tossed out.
- No written contract – Debt collection lawsuits require the original written contract or credit agreement. If this cannot be produced, the judge may dismiss the case.
- Incorrect debt amount – If the amount demanded is substantially incorrect, the suit may be thrown out. Even small errors can invalidate the claim.
- Settlement eligibility – Debt that is eligible for settlement under Florida law cannot be the basis for a lawsuit. This can defeat collection cases.
A knowledgeable attorney knows which defenses apply to each type of creditor lawsuit. Fighting the lawsuit successfully can eliminate the debt entirely.
Florida Usury Laws
Florida’s usury laws limit the maximum interest rates creditors can charge on loans. Rates above the usury cap are illegal and unenforceable. Common usury rate limits under Florida law include:
- Loans under $500k – Maximum 18% interest per year
- Mortgages – Maximum 18% interest per year
- Credit cards – No limit, except out-of-state banks are capped at 30%
If a creditor has violated Florida’s usury laws by charging excess interest, they may be barred from collecting any interest at all. A debt relief attorney can have usurious interest invalidated to reduce amounts owed.
Lien Stripping
If debts are secured by business assets or property, lien stripping may help reduce amounts owed. This involves separating a lien into secured and unsecured portions. Some key points:
- The secured part equals the collateral’s value. This part must be paid.
- The unsecured part can potentially be discharged without payment.
- Lien stripping is allowed in Chapter 11 and Chapter 13 bankruptcies.
By stripping down liens to collateral value, the total debt burden is decreased. Experienced bankruptcy counsel can pursue this. Just beware – lien stripping has specific eligibility conditions.
Business Debt Negotiation
For some businesses, negotiating directly with creditors may be the best path. An attorney can add leverage to these negotiations by:
- Citing violations of collection laws – Creditors often become more cooperative when illegal practices are pointed out.
- Drafting settlement agreements – Legally binding agreements prevent settled debt from being resold or recollected.
- Threatening litigation – Creditors may offer better terms to avoid potential lawsuits over violations.
- Freezing interest and fees – Attorneys can negotiate for interest and fees to stop accumulating during talks.
With an attorney’s help, businesses can often negotiate debts of 50% or less through voluntary settlement. And this is done without the complexities of bankruptcy.
Finding the Right Attorney
As you can see, Jacksonville business owners have many options for seeking debt relief. But making the best choices requires experienced legal guidance. Here are some tips for finding the right attorney:
- Specialization – Look for lawyers focused specifically on business debt relief and bankruptcy. Avoid general practitioners.
- Case experience – Ask about the number and types of cases they have handled. More experience brings better results.
- Cost structure – Beware lawyers charging large upfront fees. Reasonable attorneys work on contingency or payment plans.
- Reviews – Check online reviews and the Better Business Bureau. Good lawyers have many satisfied clients.
- Free consultation – A reputable lawyer will provide a free initial consultation to discuss your situation.
Don’t let debt make you feel trapped and hopeless. With an experienced Jacksonville business debt relief attorney on your side, you can find the optimal solutions to get your company back on track. There are always options, so take that first step and contact a lawyer today!