[Cambridge]

I have a company that I've worked with for several years. The business has been running strong for 20 years and it's very profitable, but lately they've taken on so much debt, bank debt, credit line max debt, even daily loan debt, I believe mainly due to a divorce and some other personal stuff, and it's getting out of hand. The daily payments alone are 1/3 of his monthly gross, and that's not even counting the traditional bank loan monthly payment. They're over leveraged and I'm not sure what to do.

I have been seeing the debt relief companies pop up all over, one in particular is offering 6% of total consolidation, which for this client, could be a substantial amount for me.

I need to know what I'd be getting my client into, the pros and cons. I need to know what the long term effects would be, how it works, what these companies are doing (I realize they're settling) but what does that do to the business? What would that do to a business with a traditional bank loan (not talking about settling that one) but what would it affect?

Credit (personal and business), future ability to fund, costs, the basic low down of what this is all about. I hear from the sales reps and they make it sound like this is the best thing since sliced bread, but it seems moldy to me, and maybe I'm wrong. And is 6% even a good deal as an ISO with these companies?

I'd honestly pass on the 20-30k I could make on this deal if it destroys a company that's been in operation since the 90s. I'm not in the business to do that. But if this is an option that should be considered, then I'd like to hear from you all about why, and if not I need to hear why not.


Any advice would be greatly appreciated, please!