In our first article in the personal insolvency series, we looked at the prevalence of personal guarantees for business loans and the risks this poses for a business owner’s personal assets. Here, we continue by looking at the options available to business owners when they are unable to repay debts and are facing legal action.
Debt collection and legal action
In a situation where debt is owed but cannot be paid, it can feel as if there are no routes out of the deadlock. This is exacerbated if there is significant debt owed, accumulated debt to different parties or, crucially, if the debt is bound to personal assets through a personal guarantee.
In this situation, as time moves on without resolution, negotiation between parties often becomes fraught. Without a resolution in place, the only option left available to a creditor is legal action, which, in the worst cases, can result in the forced closure of the business through liquidation and personal bankruptcy.
Unaffordable repayment terms
This ordeal is one any business owner will want to avoid if possible. Yet, it can lead some to agree to whatever the repayment terms offered by the creditor (or debt collector) are. Down the line, this can leave business owners attempting to repay more and more debts alongside existing terms that are unaffordable, creating an even worse situation.
This is where using a professional specialist in business and personal debt dispute resolution can make a real difference, helping you to clear ongoing debts and move forward.
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Debt dispute resolution
Debt dispute resolution uses a range of techniques to help different parties reach a suitable settlement. A debt resolution specialist can help mediate and negotiate terms that will satisfy the creditor/s and provide the best result for the business owner. This type of arbitration removes the need for court action, which can be both costly and lengthy.
Using a specialist to find a resolution is more affordable than a formal legal process, whilst still putting in place a legal agreement between the parties for repayment. This avenue often opens up more imaginative solutions, which business owners would be unable to facilitate themselves. This includes locating suitable funding, assessing and agreeing on workable repayment terms, reducing or mitigating the debts owed and discussing personal insolvency options (such as an Individual Voluntary Arrangement or Debt Management Plan) as alternative solutions to protect personal assets.
How we can help you with debt dispute resolution
The sooner you seek professional advice on unpaid debts, the more options that will be open to you.
We have extensive experience in advising business owners on debt resolution, personal guarantees and repayment terms and we will always work with you to find the best solution for you and your business.
One of our Partners would be more than happy to have a non-obligatory confidential chat with you. We can be contacted at rescue@opusllp.com or call us on 020 3326 6454 and we will arrange for a call with one of our Partners.
AUTHOR
This guidance article was written by our Personal Insolvency Specialist, Paul Mallatratt, Partner at Opus.
Opus is authorised and regulated by the Financial Conduct Authority. If you are looking for advice in relation to personal debt, click here to understand more about all options available, the pros and cons for each and fees relating to our services. If you have a complaint, click here for our procedure.