Is debt settlement an option? Charlotte NC

The 2006 holiday season is behind us, and year-end sales results tell the story: While many RV dealers (especially independents) often rely on strong year-end sales numbers to "make their year," not everyone got them in 2006. As a result, it can be difficult to pay vendors and other bills at the start of the year.

If you're in this boat, what are your options? You probably have already cut costs to the bone. If you sell off key assets, customer and employee satisfaction are likely to falter. Bankruptcy or a store closing might seem like your only remaining routes.

But there is an alternative to these and other drastic steps: debt settlement.

While it's not widely known among independent RV dealers, your creditors are often willing to settle past-due debts for less than the full balance owed. Why is that?

More than ever, manufacturers and other suppliers realize that their fortunes are tied to those of the retailers who sell or use their products. Most of them are willing to accept a portion of what they're owed in order to help a good retail client get back to financial health — so that the retailer can continue buying from them.

Focus on rebuilding

How much can debt settlement reduce a company's payables? If you hire an experienced, professional negotiator who deals with each creditor individually, some of your debts could shrink by as much as 70 percent (that is, you would pay only 30 percent of the outstanding balance, without borrowing money). Just as important, the negotiator should handle all calls and letters from creditors — allowing you to focus on rebuilding sales and curbing expenses.

A key question that any retailer should ask a debt-settlement firm is how it earns and collects its fees. Ideally, the fees should be based solely on the dollar amount of debt savings achieved for the client. This makes debt settlement a virtually "risk-free" solution for the client: no fee to pay until all negotiations are completed.

Coming just after the holiday season, the first quarter of each year is when many "on-the-bubble" retailers must decide whether to restructure, file bankruptcy, or shut down entirely. Before committing to any of these options — which are usually expensive, stressful, and quite public — it makes sense to look into debt settlement.

Steve Newman is principal of Performance Source Inc (PSI). Since 1963, PSI has helped thousands of clients save millions of dollars and satisfy their creditors without borrowing money. Under the company's risk-free process, clients decide which payables they want PSI to negotiate, they approve (or decline) all proposed settlements in advance, and owe PSI nothing if a settlement is not reached or not accepted. And because PSI also handles all contact with clients' creditors, clients are able to focus on growing their businesses. Steve can be reached at 800/883-5080, or snewman@psi1963.com. The company's web site is www.performancesourceinc.com.