6 Ranges by Creditor Type
What $1M in Business Debt Settles For

No creditor publishes the discount it will accept, and no public dataset records what business debts settle for by creditor type. The illustrations below show mechanics at work, labeled as illustrations, and each one illuminates the same principle from a different side.

Settlement price follows the creditor's alternatives. Six creditor types hold six different sets of alternatives. The owner who prices each alternative with care knows the settlement before the first call is placed.

Stacked MCA Positions

Cash flow under stacked debits snaps where the statements said it would. Each advance serviced the withdrawals of the last, and the account carries the scars in overdraft marks. The MCA balance is the most negotiable figure in the stack. No lien secures most of these positions, no court order commands them, and no government machinery collects them, which leaves the funder with daily debits against an account that cannot sustain them.

Assemble and reconcile every agreement, every debit, and the calendar showing which advance paid which predecessor, since the IRS treatment of canceled debt as income puts the tax on forgiveness in the settlement math from the start.

As illustration only, and not as a quotation of any market: a $1M stack of daily debit positions with no real property behind it invites discussion of a substantial discount for a lump sum, while the same face amount owed to two funders holding confessions and operating liens invites far less. The advance was priced for desperation. Paperwork is how the owner reclaims the margin.

SBA Guaranteed Loans

After default, the SBA loan enters a servicing sequence the owner does not control. SBA places compromise among post servicing actions alongside charge off, which means the lender liquidates collateral first in order to fix the deficiency the compromise will address.

Demand the chain and confirm it before offering: the loan number, the liquidation accounting, and the deficiency figure both the lender and the agency recognize. Counsel ensures the compromise package addresses every obligor the guaranty binds, in most stacks of this kind, though no dataset counts them, since the federal guaranty protects the lender under its terms and gives the borrower extremely narrow comfort.

IRS Business Tax Balances

Before any offer is computed, the forms come first. The IRS frame for tax payment options starts with full payment, with interest and monthly penalties accruing on what remains, and installment agreements or a qualifying compromise available only to filers who meet stated requirements rather than to every business that asks.

File the compromise materials before calling about them; the paper goes first. No telephone call, even casually placed, substitutes for the filed forms and the current deposits the agency requires. Employment tax balances expose responsible persons in ways the company balance alone does not resolve. You file the forms and then you discover what the forms allow.

Secured Equipment and Receivables Lenders

Collateral coverage sets the floor. Rarely does collateral value match the outstanding balance, so the condition of the equipment, its location, and what the resale market would yield at auction matter more than the hardship narrative behind the request. A lender secured by receivables or equipment discounts only to the point where repossession and sale look worse.

Resist the urge to sell equipment free of its lien to fund a settlement elsewhere. The New York Commercial Code rule on disposition of collateral continues the security interest despite disposition and attaches it to identifiable proceeds, subject to statutory exceptions. I cannot say from this desk how often equipment lenders discount for speed; the agreements decide. The collateral sets the discount; the narrative frames the request.

Vendor Trade and Business Card Balances

After charge off, the collection effort continues. Old unsecured balances lose value while they sit, and a buyer of the paper or the original vendor may still decide the file is worth a letter.

The oldest balance in the stack is the cheapest to settle as a rule. It is also the least predictable. Trade creditors are extremely patient until they are not. Whether vendors sell defaulted accounts for fractions of face value or hold them out of principle is a question no dataset in this library answers.

Every creditor prices certainty. No two creditors price it alike.

As illustration only: a $1M face amount spread across twenty vendors behaves nothing like the same amount owed to one factor holding the receivables. The first rewards individual negotiation. The second answers to arithmetic. In our files, the cheapest settlement has belonged to the oldest unsecured balance, since no lien secures it and no government machinery collects it.

Judgment Creditors With Liens

Simply bring the judgment, the lien search, and the payment history. A creditor holding an entered judgment with a liened account negotiates from possession rather than from prediction, and the discount, if any, reflects the enforcement cost the creditor avoids: the judgment, the lien, and the calendar the creditor now controls. Most owners meet that creditor too late, and the calendar explains why.

The stay rewrites every figure in this article.

The federal courts describe Chapter 11 reorganization as a court process in which the debtor remains in possession in the ordinary case, proposes a plan, and pays creditors over time, with filing that brings an automatic stay, subject to exceptions. What the owner pays, or refuses to pay, after judgment belongs beside the reorganization alternative, including the lump sum the creditor would receive under a plan.

Enforcement counsel tends to discount a certain lump sum against the uncertain yield of levies and restraints. Delancey Street is a debt settlement company, not a law firm, coordinating with independently licensed counsel for legal work; it negotiates and documents that exchange beginning with a free confidential initial review, and the company ensures no settled balance survives in the form of a lien, a judgment, or a guaranty claim left unaddressed. Owners arrive asking what creditors take. The files answer a different question, and the answer is always local to the file.