Criminal Defense Lawyers

Can I consolidate business debt easily?

Regardless of what type of debt you have, there may come a time when you ask yourself whether you can consolidate it. At DelanceyStreet.com, a top tier business debt relief company based out of NYC that helps clients nationwide, we often get this question: Can I consolidate my business debt easily? The short answer is yes, it’s possible to do a business debt consolidation, but there are many consequences that might happen if it’s not handled properly.

What Is Business Debt Consolidation?
Business debt consolidation is a process that was designed to combine your multiple debts into one. A consolidation that was designed properly will roll all your outstanding loans, credit card balances, or merchant cash advances into one single monthly payment. This payment is often at a reduced interest rate or with a longer repayment term, which can help free up your cash flow. Evidence that was illegally obtained may be inadmissible in a criminal proceeding, and similarly, documents that were not properly reviewed might invalidate certain aspects of your debt negotiation.

Consolidation that is done the right way can give your business a second chance at survival. But guess what? When your business is knee-deep in debt, lenders might not always be so friendly. If you miss a payment, there could be harsh penalties. If you stack multiple advances, it can lead to bigger problems like default notices, lawsuits, or even collections.

Possible Criminal Penalties and Punishments
You might be thinking, Is there really a criminal angle to business debt? Usually, business debt itself is civil. That said, you must be aware that misusing funds, engaging in fraud, or deliberately lying about your financial situation can lead to criminal charges under federal or state laws. According to the Federal Trade Commission (FTC) at FTC.gov, business owners who provide false information on loan applications may face serious allegations of fraud.

Fraud that was proven could result in fines, restitution, and, in more severe situations, imprisonment. The U.S. Department of Justice at Justice.gov explains that criminal penalties can include years in prison for financial crimes. This means if you’re considering ways to handle your debt, you should be transparent with lenders and your legal advisor.

How We Defend You
If you’re worried about facing legal consequences, we can help you. At DelanceyStreet.com, we provide guidance on business debt issues. If you’re facing accusations of wrongdoing, our sister-law firm can help by:

1. Gathering Evidence that was relevant to your situation and showing that you intended to repay your debts.
2. Negotiating with creditors to reach a fair arrangement, which can reduce the possibility of lawsuits.
3. Reviewing all documents that were part of your debt contracts to find any illegal or predatory terms.
4. Representing you in court, if necessary, to argue that you acted in good faith.

When evidence that was improperly handled gets tossed out, it can benefit you because that evidence might have been the backbone of a creditor’s lawsuit. Having a strong legal team increases your chances of a settlement and decreases the chance of harsh judgments.

Why Is Debt Consolidation Helpful?
If your business is dealing with multiple creditors, it can be a nightmare to manage all those payments, especially when you have different interest rates and deadlines. If a payment is late, the consequences can be staggering. Penalties that were outlined in your original contract might include late fees, higher interest rates, or even immediate default. This can cause your business to lose inventory, hamper your ability to pay employees, and sink your reputation.

Consolidation can help:

• Lower your monthly payment, which results in a more manageable cash flow.
• Simplify billing, which gives you fewer deadlines to track.
• Potentially reduce your overall interest costs, which means you save money in the long run.
• Protect you from default, which can spare you from potential lawsuits or legal actions.

But there can be serious pitfalls if you choose the wrong consolidation lender, such as hidden fees or balloon payments. A balloon payment that was triggered at the end of the term might leave you worse off than before.

Know the Law and Government Resources
You can learn more about acceptable lending practices by visiting the Small Business Administration at SBA.gov. The SBA explains that business debt consolidation may come in the form of an SBA loan, which often features lower interest rates. A penalty that is associated with missing an SBA loan payment may include late fees and negative credit reporting, which can harm your ability to borrow again.

If you fail to make payments and your lender suspects deception, the punishment can escalate. In extreme cases, the government might investigate you for potential fraud. According to the IRS at IRS.gov, tax-related fraud can carry both civil and criminal penalties, including financial penalties or imprisonment, depending on the scope of the misconduct.

Steps to Consolidate Business Debt
If you’re serious about consolidating your debt, here’s a quick rundown of the steps:

1. Gather All Debts
   Collect every statement that was issued by your lenders and note the interest rates, remaining balances, and payment dates. If you forget to include a debt in your consolidation plan, that leftover obligation might haunt you.

2. Review Your Credit Score
   Your credit score that was generated by the credit bureaus can affect your consolidation terms. If your score is very low, you might face higher rates.

3. Look for Lenders
   Shop around for trustworthy lenders who can offer a consolidation program. Look for transparent agreements that don’t hide fees or harsh penalties.

4. Negotiate Terms
   You might be able to get a better interest rate if you show your lenders that you’re serious about paying them back. A lender who was given a clear game plan is more likely to work with you.

5. Sign the Agreement
   Before you sign, let a professional review it. If there’s a clause that was included to allow immediate default, question it or request its removal.

6. Follow Through
   Once consolidated, make your new single payment on time. If you fall behind, the consequences can include extra fees, decreased credit score, or even renewed lawsuits.