If you have been sued for business debt in California, then you are not alone. With so many small businesses hurting during the pandemic, debt collectors are still coming after small businesses who can’t pay their lenders. In fact, I’ve had an uptick in people calling me about American Express business debt settlements.  If you are facing a debt collection lawsuit for your business debt and you don’t want to file bankruptcy, then a debt settlement could be a way out. A debt settlement is a negotiation between the small business owner in debt and the lender that the business owner will pay a greatly reduced amount of the debt owed in a lump sum or with a payment plan over an extended period of time. The lender would rather accept a debt settlement than have the business owner declare bankruptcy and receive none of the debt repayment.

what to do if Sued for Business Debt in California

For example, a small business owner took out a merchant loan from Bank of the Internet/On Deck Capital for $6,000. His business went under and he was stuck with an outstanding balance due of $7,321. The debt was sold to CACH, LLC, which is a debt collection entity that buys third-party debt. His attorney negotiated a debt settlement with CACH, LLC for a lump sum payment of $447.37, saving him approximately 94% of the total amount due.

What You Should Do If Sued for Business Debt in California

If your business is being sued for debt, then you’ve probably exhausted all of your options in trying to pay back your loans and are now wondering how to deal with business debt collectors. Many loan terms are seemingly unfair to businesses and drive business owners deeper into debt with their outrageous interest rates. 

For instance, if a owner takes out a loan from LoanMe for $20,000. The terms of the agreement usually carry an interest rate of 94% per year.  Under those repayment terms, the business owner would have to pay $1,566.85 per month for 120 months. So, in total he would have to pay back over $188,000 for a $20,000 loan. When the business started to go under, and he had only made two payments on the loan. LoanMe hired a law firm to sue him for over $56,000, which was the principal loan and accrued interest due at the time the lawsuit was filed. Before the business owner was officially served with the lawsuit, he retained a law firm and they settled the debt for one lump sum payment of $15,000, saving the business owner over $41,000, which was approximately 74% of the amount that was claimed due in the lawsuit.

Another business who was sued for business debt in California had taken out a line of credit with American Express for a Plum card. This particular line of credit doesn’t have a spending limit and is targeted for business owners. With this particular card, your purchasing power adjusts with the use of your card, your financial history and your payment history. This business owner relied heavily on Amazon for the distribution of her product. American Express allowed her to essentially float credit each month based on the revenue her business generated. Her balance ballooned to over $621,000. Unilaterally, Amazon decided that she had violated their policies and stopped distributing her products, which forced her to shut down her business. American Express legal came after her for the debt, so she called an experienced debt settlement attorney asking how to deal with business debt collectors. The attorney negotiated to settle her account for $279,849.28, which was approximately 45% of the balance due on this account. Since she was in the process of selling the business to a third party, she was able to fund this settlement with the proceeds from the sale of the business.

Many small business owners are being sued for business debt in California.  Find a business debt lawyer who has experience in debt settlement and a proven track record of saving their clients’ money. We offer a free consultation to go over your particular situation and map out a plan to get out of debt. Call us at 844-729-4866 or go to the contact page on our website.


 

Jonathan B. Haskett is a debt attorney serving clients in California and focuses exclusively in debt relief. He is licensed to practice in California. Mr. Haskett owns and operates The Debt Settlement Lawyer in San Diego, and helps people with debt problems all over the country, if possible. For more information, please contact attorney Jonathan Haskett at 844-729-4866, or jonathan@thedebtsettlementlawyer.com.  or use our online contact form.