WHAT PERCENTAGE OF BUSINESS DEBT WILL CREDITORS SETTLE FOR
Ever wonder if creditors will truly settle your business debt for pennies on the dollar?
Guess what? It depends on lots of factors, like your business’s financial history, the type of merchant cash advance or credit card debt you have, and how willing the lender is to negotiate.
REGARDLESS OF THE TYPE OF DEBT
You might see creditors agreeing to settle for anywhere between 30% to 70% of the total owed. But these figures are not set in stone. According to the U.S. Small Business Administration (https://www.sba.gov), each creditor has its own guidelines on what they might accept—especially when they believe your business could go out of business and leave them with nothing.
WHY CREDITORS SOMETIMES AGREE TO A SETTLEMENT
Creditors, including SBA lenders, equipment financing companies, and vendor/supplier groups, have one main goal: They want to get paid. They’d rather recover some money than none at all. For instance, if your business is behind on payments, a lender might see a settlement as the fastest way to walk away with some return—especially if they sense you might default or even file bankruptcy.
HERE’S THE LENDER’S POINT OF VIEW
They worry that if they push too hard, your business won’t pay at all. In many cases, that’s why lenders are open to a conversation about settling your debt. From their perspective, they’d rather have a partial payment than watch you shut down. Regardless, it doesn’t mean they’ll jump at a super-low offer. They have their own internal policies, plus they often consult attorneys before saying yes.
WHAT ABOUT LEGAL PENALTIES AND LAWS
There are laws that protect both you and the creditor. For example, if you’re dealing with aggressive collection tactics, the Federal Trade Commission (https://consumer.ftc.gov) notes that the Fair Debt Collection Practices Act sets guidelines on what collectors can and cannot do. In some states, lenders can use a Confession of Judgment (COJ) if you signed one. This COJ lets them skip some legal steps and get a judgment if you default. That can lead to rapid account freezes or property liens.
DEFENSE STRATEGIES IF THINGS GET TOUGH
At DelanceyStreet.com, we know lawsuits happen. We’ve seen lenders sue for the full amount, plus interest and penalties. Our team focuses on these legal defenses:
- Reviewing the Contract: We underline any clauses that might violate state or federal law. If there’s a hidden fee or an illegal interest rate, that can weaken the creditor’s case.
- Negotiating a Reduced Balance: We come prepared with proof of your cash flow, your assets, and your liabilities. In many cases, lenders realize a fair settlement is better than a long fight.
- Challenging Penalties: Lenders love adding default fees. We see if those fees follow the guidelines set by local statutes or if they’re inflated. Sometimes, penalties can be removed entirely if they violate rules.
- Explaining Hardship: If your business took a major hit—like a natural disaster or a sudden industry slump—we highlight that context. In fact, many creditors are sympathetic if there’s solid proof of your hardship.
BUT HOW LOW WILL THEY GO
No one can guarantee a specific percentage. The Federal Trade Commission warns about “any company that claims you’ll get a huge discount for sure.” Every situation is unique. Some creditors might settle at 40%. Others might insist on 70%. Some might prefer a longer payment plan instead of a lump-sum reduction.
ANYWAY, THE BOTTOM LINE
It’s impossible to predict your exact settlement amount until you try. If your business is overwhelmed by toxic debt, consider that a well-executed business debt settlement might save you a lot of money. Or it might not. That’s why we always explore multiple solutions—from invoice factoring to debt consolidation to direct negotiations.
DEBT RELIEF IS POSSIBLE. SO IS PROPER DEFENSE.
At DelanceyStreet.com, we believe in a proactive approach. As a top-tier business debt relief firm based in NYC—but serving clients nationwide—we aim to keep you up and running. We create strategies designed to avoid lawsuits, reduce your overall debt, and give you breathing room.
IF THE LENDER TRIES TO DISMANTLE YOUR DEFENSE
Don’t panic. We’re ready to show them your financial data, we’re ready to discuss alternative repayment schedules, and we’re ready to remind them of any legal limits they must follow. No lender wants you to file bankruptcy. No lender wants endless legal battles. If you do face a lawsuit, having a strong defense team—like Delancey Street—can change everything.
ARE YOU WORRIED ABOUT YOUR DEBT RIGHT NOW
You aren’t alone—small businesses across the country are in the same boat. So many entrepreneurs lose sleep over merchant cash advance payments. At Delancey Street, we can help you. Our approach is based on open communication, data-driven negotiations, and a clear plan to protect your business from aggressive lenders.
AS SEEN IN MAJOR MEDIA
We’ve been quoted on AmericanExpress.com, Forbes.com, and more. Our track record speaks for itself.
We fight. We negotiate. We succeed.
TAKE ACTION TODAY
If you have questions about what percentage your creditors might settle for, or if you’re scared of legal action, reach out now. Our team—led by our Chief Legal Officer, Steven Raiser, ESQ—is ready to go to work for you. We’ll look at your debts, examine your credit card statements, and talk to your creditors so you can focus on what you do best: running your business.
Remember: only a lender can decide how low they’ll go. But with the right strategy, you may be able to settle for much less than you owe.