Business Debt Restructuring Companies: 6 Questions That Reveal What They Actually Do

In plain terms, a restructuring company changes the terms of your debts and/or agreements with your creditors, which can help reduce your monthly payments and make your debts more affordable. With creditors, debt restructuring can take many forms. It could include bringing short-term debt payments onto longer-term payment plans; reducing interest rates; or seeking more favourable arrangements. Debt restructuring isn’t a get-out-of-jail-free card. You’ll still have the debt and be liable for it even after the restructuring, but if successful, the terms of your obligations should be more manageable.

Find Out What They Really Do

Companies are pretty good at telling you what they want you to know. That’s usually a slogan or catchy buzzwords that give you a good general impression and emotion towards their service. But what if the phrase, “giving you more leverage over your debts” doesn’t make complete sense to you? How do you dig deeper? How do you find out what they really do and why it matters to you?

Lots of people think debt restructuring is the same as debt settlement or bankruptcy, but the three are all very different. Debt settlement is where a third party works with your creditors to wipe out part of your debt and pay off the rest. Bankruptcy is a court-supervised reorganization of your business. Debt restructuring is a private negotiation with creditors who are willing to come to an agreement they can live with, such as a longer term or a lower interest rate. So the first thing to ask is very simple: what do you do?

Some services only advise, leaving you to do the talking. Others will act as an intermediary, facilitating things from the middle. Some might take the reins, speaking and negotiating on your behalf. Each have benefits and drawbacks, and not everyone wants to hand over their financial fate. But not everyone has the time or savvy to go toe-to-toe with creditors. So ask who will actually pick up the phone. Consultants are advisers. They analyze your situation, give you different options and help you make a good decision. They’ll help you determine how much you owe, what your creditors are likely to accept, and what the best course of action is for your financial situation. They are not attorneys and they don’t go to court with you. They are not accountants and they don’t file taxes with you. They are not lenders and don’t loan you money.

The third question is when they expect you to pay them. The Telemarketing Sales Rule covers any seller promising to renegotiate or in some way change the terms of your unsecured debt, including interest rate and balance. A debt relief seller can’t collect any fee until a debt is actually settled or resolved. Using a lawyer doesn’t exempt the company from the FTC’s regulations, either, and calling the upfront money a retainer doesn’t make the fee legal. Companies on the up and up should tell you exactly what they’re doing and why. Since 2024, the FTC also forbids dishonest or misleading claims made during business-to-business telemarketing calls, which used to be mostly exempt. Telemarketers can’t lie to you, even if you’re trying to make a purchase for your business.

The fourth question you need to ask is this: “what will you build before anyone calls a creditor?” Simply put, you want to know what they’ll be doing at the beginning of the process, and how they’ll work toward resolution. Any good debt consultant will start with a thorough audit of all your business debt. They’ll gather balances, interest rates, terms, collateral, UCC liens, personal guarantees, and anything else that could affect a debt negotiation, and present a formal list of what the situation is. You may be surprised to learn all the places your business has an obligation.

The next thing they should do is show you how each possible path will actually affect your business. A twelve-month rolling cash flow forecast should show how the restructuring plan affects liquidity, covenants and runway. Once you’ve found a path that makes sense, a solid restructuring plan should go creditor-by-creditor through each of your debts, then explain which debts will restructure, which ones will need special circumstances, who you should approach first, and exactly what you’ll approach them with. The goal should be a written playbook with target terms that will give you the most leverage and impact.

The fifth question you should ask is what the company will actually be able to change in an MCA. An MCA isn’t a loan. It’s the purchase of future receivables, so you’ll probably find there’s no interest rate to cut. That doesn’t mean you can’t find savings, but you’ll need to look at the payment itself. How often do you remit? How much do you remit with each payment? How long is the term? Can the contract be reconciled to actual receivables? Can the remittance go from daily to weekly? Can the remittance period get longer? Is it possible to sequence an MCA stack? One door has closed: Since June 1, 2025, money from an SBA loan can’t be used to refinance an MCA. And if the terms still don’t work for you, a payoff is a settlement.

The Wrong Solution

The sixth and last thing you should find out is whether they are willing to tell you if their own service is the wrong answer. A formal debt restructuring is often preferable to debt settlement, especially when it can preserve your credit rating and relationships with creditors. It’s also often preferable over a bankruptcy, because it doesn’t involve the court, doesn’t rack up legal fees, and keeps the business running in the meantime. Still, not all distressed businesses are savable. A qualified debt restructuring company will be honest with you and tell you when restructuring won’t work. For example, when a business doesn’t have enough cash flow to carry both the restructured plan and basic operations. If a business isn’t viable, restructuring will just delay the inevitable. It may also be the wrong solution if the creditors won’t negotiate or if bankruptcy makes more sense.

If you negotiate a debt settlement instead of a restructure, note that canceled debt usually counts as taxable income, even if no 1099-C is issued. There’s an insolvency exclusion, but it only applies to the extent you were insolvent. That’s done on Form 982. If bankruptcy does make more sense for your business, keep in mind that a Subchapter V bankruptcy has a debt limit of $3.42 million, there is a trustee in every case, and the debtor has 90 days to file a plan.

Whichever path you take, you know something’s wrong when payments take a growing chunk of every deposit, when the new advance is needed to cover the last one, when ACH debits start bouncing, when you’re always late with payroll or rent, or when default notices start coming. If you’re experiencing any of the signs above, seek help sooner rather than later. Your business has a better chance of success while it still has cash flow and hasn’t defaulted. The six questions above might not disqualify a company outright, but they’ll help you navigate the chat and see how the company operates. Use them as a guide, and let them spark ideas for followup questions and deeper exploration.