Running a business often means juggling financial responsibilities, and business credit card debt can add up quickly if you’re not careful. Because many business credit cards require a personal guarantee, nonpayment could impact both you and your business and even lead to personal bankruptcy.
Whether you’re facing high interest rates, multiple balances, or cash flow shortages, there are strategies to help you regain control. Here’s what to know about your options for business credit card debt relief.
Strategies to Get Relief from Business Credit Card Debt
Depending on your situation and goals, there may be a handful of options from which you can choose to pursue business debt relief. Here’s what to know about your options.
Negotiate Directly With Your Credit Card Issuer
Sometimes, a simple conversation with your credit card company can make a difference. Reach out to the financial institution to talk about your potential debt relief options.
For example, you may be able to negotiate a lower interest rate, payment plan, or even temporary forbearance. Be honest about your situation and have a clear idea of what you can realistically afford.
This option is best for business owners who are just starting to worry about their debt situation or are at risk of missing a payment.
Debt Settlement
Debt settlement involves negotiating with debt collectors to pay less than the total debt you owe, either with a lump sum payment or a new payment plan.
This approach may help you eliminate debt obligations faster, but it can also have a negative impact on your business credit report and business credit score. It’s best considered when you’re already behind on minimum payments and have sufficient funds to offer a reasonable settlement amount.
While you can negotiate a settlement on your own, it can help to work with a business debt settlement attorney or debt settlement company to get expert legal advice and guidance, along with a better deal.
Business Consolidation Loan
Consolidating your small business debt into a new loan can potentially lower your monthly payments and reduce interest rates. Business debt consolidation loans are available through banks, credit unions, and online lenders.
That said, you may need good credit to get approved for a business loan or business line of credit with favorable terms, so it might not be a good choice for small business owners with lower credit scores.
Balance Transfer Credit Card
If your credit is still in good shape, a business balance transfer credit card may offer an introductory 0% APR promotion. This allows you to move high-interest business debt to a card with no interest for a set period.
That said, you’ll likely incur a balance transfer fee, which can range from 3% to 5% of the transfer amount. You’ll also want to make a plan to pay off the balance before the promotional period ends, so you won’t get stuck with another high interest rate.
Credit Counseling Services
Nonprofit credit counselors can provide financial education, personalized advice, or even a debt management plan that may provide affordable payments, lower interest rates, waived late fees, and other benefits. Repayment terms are typically three to five years.
A credit counselor can help you assess your situation, negotiate with creditors, and build a realistic repayment plan. Look for agencies accredited by the National Foundation for Credit Counseling or the Financial Counseling Association of America. And note that this may impact your credit.
Legal Options for Business Credit Card Debt Relief
If your debt is unmanageable and other relief strategies aren’t feasible, bankruptcy may be a last resort. Filing for bankruptcy can temporarily stop collections and provide a legal structure for dealing with debt.
Chapter 7 vs. Chapter 11 Bankruptcy for Businesses
Chapter 7 bankruptcy involves liquidating business assets to pay off creditors and typically leads to business closure.
Chapter 11, on the other hand, allows businesses to reorganize and continue operating while repaying debt through a court-approved plan. Choosing between the two depends on your long-term goals and financial standing.
Before you make any financial decisions, it’s often a good idea to consult with a bankruptcy attorney who can evaluate your situation and help you determine which one is right for you.
Pros and Cons of Filing Bankruptcy
As you evaluate your options, here are some advantages and disadvantages involved with filing for bankruptcy.
Pros
- Immediate relief from collections and lawsuits
- Opportunity to restructure or eliminate debt
- Legal protection during the process
Cons
- Significant damage to business and personal credit
- Legal and court costs
- Public record of financial distress
Improving Cash Flow to Prevent Debt Issues
Maintaining positive cash flow can reduce reliance on credit cards and help you pay down unwieldy business credit card debt. Consider these tips:
- Review and reduce unnecessary expenses: Audit your spending to identify recurring costs you can eliminate or scale back, such as unused subscriptions or non-essential services. You can also evaluate other discretionary spending to get a feel for what you can reasonably cut back on.
- Renegotiate vendor contracts for better terms: Reach out to suppliers to ask for discounts, extended payment terms, or bulk pricing that can ease cash strain.
- Offer early payment discounts to customers: Encouraging customers to pay ahead of schedule. Even if you offer a small discount, it can boost your cash flow enough to get you out of a financial rut.
- Automate invoicing and payment collection: Using automation tools can reduce delays, minimize human error, and ensure faster payments from clients.
- Build an emergency savings fund: Setting aside cash during profitable periods can help cover unexpected costs without needing to rely on credit.
When to Seek Professional Debt Relief Assistance
If you’re having a hard time managing debt on your own, it may be time to speak with a professional.
- Missed or late credit card payments
- Difficulty making payroll or covering overhead
- Frequent calls from creditors or collection agencies
An advisor can provide an objective view of your finances and help you explore the best solutions. Working with a reputable debt relief service can provide valuable support while you’re feeling overwhelmed. These professionals can:
- Negotiate with creditors on your behalf: Experienced negotiators can often secure lower interest rates, reduced fees, or even a partial forgiveness of the total balance — terms that may be difficult to achieve on your own.
- Help you consolidate or settle debt: Whether through a debt management plan or debt settlement program, they can streamline your payments or lower your overall debt burden.
- Create structured repayment plans: A professional can help you map out a realistic path to financial recovery, including a timeline and monthly budget tailored to your business cash flow and other available money.
- Reduce stress and save time: Instead of managing multiple accounts and negotiations, you can focus on running your business while the experts handle the heavy lifting.
Just make sure to vet any service thoroughly. Ask questions about their process, fee structure, and other features that are important to you.
Conclusion: Regaining Control of Your Business Finances
Business credit card bills can feel overwhelming, but you have options. Whether you negotiate directly with creditors, consolidate debt, explore legal protections, or seek professional help, the key is to act early.
Addressing the problem now can prevent bigger financial issues later and help your business get back on stable ground. With the right strategy, you can regain control and build a stronger, more resilient financial future.
Tayne Law Group is an award-winning firm with over 20 years of experience helping businesses find relief from overwhelming debt. Schedule a confidential, no-obligation phone consultation by calling (866) 890-7337 or filling out our brief contact form. Your privacy is always protected, and we never sell or share your information. Whether you’re seeking answers or ready to take action, we’re here to help clients nationwide navigate their debt challenges with clarity and confidence.
