Business debt settlement is a process that allows a private or public company, or a sovereign entity facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts to improve or restore liquidity so that it can continue its operations. Debt settlement, also known as debt arbitration, debt negotiation or credit settlement, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full. During a negotiation period, all payments by the debtor are made to the debt settlement company, which typically withholds payments to the creditors, even if the debtor has paid a lump sum or made payments.
Settlement is an option that the business will need to consider in the event of keeping its doors open. Not all business will qulaify for settlement. Settlements are not gauranteed, howerver if the business demistrates the inablility to pay the full obligation, it may qulaify for settlment programs.