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How Much Does Business Debt Settlement Cost? Breaking Down the Fees

February 24, 20248 min read



How Much Does Business Debt Settlement Cost? Breaking Down the Fees

Settling business debt can be a smart financial move for companies struggling with high debt loads. But before committing to a settlement program, it’s important to understand the potential fees involved. Here’s an overview of common fees charged by debt settlement companies, factors that impact costs, and tips for keeping fees affordable.

Typical Fees Charged by Business Debt Settlement Companies

Most business debt settlement companies charge two main types of fees:

  • Settlement fees – These are based on a percentage of the amount of debt forgiven in a settlement. Typical fees range from 15% to 25% of the settled debt amount. On a $100,000 settlement, that could mean fees of $15,000 to $25,000.
  • Monthly service fees – Companies also charge an ongoing monthly fee for administering the program. Fees often range from $100 to $300 per month. These fees cover consultations, negotiations, documentation, and more.

So for example, on a $100,000 settlement with 25% settlement fees and $200 monthly fees, total fees would be $25,000 (settlement) + $2,400 (12 months at $200) = $27,400.

What Impacts Business Debt Settlement Costs?

Several factors influence the total fees charged for settling business debts:

  • Amount of debt – Percentage-based settlement fees mean larger debt loads incur higher total fees.
  • Number of creditors – Settling multiple debts with various creditors requires more administrative work and time, raising monthly fees.
  • Settlement percentages – The more deeply discounted the settlements, the higher the percentage fees. Settling at 10% of balance costs less than 25%.
  • Length of program – Monthly fees accumulate over months of enrollment, so faster settlements save on costs.
See also  10 Questions to Ask Business Debt Settlement Companies

Getting the best rate on settlement fees requires negotiating with settlement companies and striving for the most favorable settlement terms with creditors.

Tips for Reducing Business Debt Settlement Expenses

The key to controlling the costs of a business debt settlement program is to:

  • Compare settlement company rates – Get proposals from multiple reputable companies. Ask about their fee structure.
  • Negotiate fees – Don’t be afraid to push for lower settlement percentages and monthly costs.
  • Gather documentation – Provide evidence to justify settlement offers at deeper discounts.
  • Act fast – The longer settlements take, the more monthly fees build up. Push for quick resolutions.
  • Get fee summaries – Review detailed fee breakdowns regularly so you understand exactly what you pay.

Reputable settlement companies want to help businesses reduce their debt burden as cost effectively as possible. Discuss options openly with consultants to find an optimal solution.

Alternative Options for Debt Relief

If business debt settlement seems too costly, investigate whether these alternative debt relief methods may provide more affordable solutions:

  • Debt consolidation loans – Taking out one larger loan to pay off high-interest debts.
  • Credit counseling – Nonprofit credit counselors help create debt management plans.
  • Debt refinancing – Getting new financing to pay off debts at lower interest rates.
  • Chapter 11 bankruptcy – Court-supervised debt restructuring option. Legal fees apply.

Each approach has pros and cons to weigh regarding long-term costs and impacts. Discuss all debt relief alternatives with financial and legal advisors to chart the optimal path forward for your business.

Delancey Street Can Help Lower Business Debt Settlement Costs

The friendly consultants at Delancey Street have years of experience helping business owners settle their debts at the lowest possible cost. We charge reasonable settlement percentages starting at 15% and monthly fees from just $100.Call 212-210-1851 for a free consultation with our business debt experts. We’ll review your situation, explain your options, provide fee estimates, and craft a customized debt relief solution. Our dedicated advisors will negotiate firmly on your behalf to reduce your debts as much as possible while keeping fees affordable.With personalized guidance from our knowledgeable team, you can feel confident settling business debts in a financially responsible way. Reach out today to start getting your finances back on track!

How are settlement percentage fees calculated? Settlement companies charge a percentage fee based on the amount of debt forgiven in a settlement. For example, with a 25% fee, settling a $100,000 business debt for $60,000 would incur $25,000 in settlement fees (25% of the $40,000 debt reduction).
When do I need to pay settlement fees? Most companies collect settlement fees when each debt is successfully settled. So you would pay 25% of the forgiven amount at the time of settlement. Some may offer options to finance fees over time.
Do I still owe monthly fees if negotiations stall? Yes, monthly administration fees are still charged regardless of whether settlements are progressing or not. These fees cover ongoing account management.
Can I negotiate lower monthly fees if enrolled longer term? Yes, some companies are willing to reduce monthly costs for long-term enrollment or for agreeing to settle a minimum amount of total debt.
Could debt settlement end up costing me more than just paying back the debts? Potentially yes, if total fees exceed the amounts ultimately forgiven in settlements. To avoid overpaying, only enroll if the projected fee-adjusted savings are substantial enough.
Are there any guarantees I’ll successfully settle all my debts? Unfortunately, no. There is always a risk negotiations won’t succeed and fees will be incurred without the desired debt reduction. Reputable companies settle the vast majority of accounts however.
Can I get an itemized breakdown of all fees before starting? Yes. Make sure to request a complete fee summary from any company you consider working with so you understand projected costs. Fees should be clearly explained.Settling business debt can be complicated, confusing, and costly if not approached carefully. But by partnering with the right settlement company and negotiating fees upfront, it is possible to resolve debts in an affordable manner. Reach out to our experts at Delancey Street to discuss your specific situation and settlement cost questions today. Call 212-210-1851 for a free consultation.

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