Debt Settlement
An agreement where a creditor accepts less than the full amount owed to resolve a debt, typically after the borrower has fallen significantly behind.
Debt settlement is usually negotiated once a business is unable to keep up with payments as originally agreed, and while it can resolve an unmanageable debt for less than the full balance, it typically has a significant negative effect on credit and future financing options.
Because settlement negotiations and their consequences vary significantly by lender and situation, a business considering this path is generally better served working with a financial advisor or attorney than attempting to navigate it alone.
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