Help With Business Debt: 6 Places to Direct the Right Question

With all the federal agencies, governments, banks, credit card companies, and even landlords you might owe money to, the best place to start asking for help depends on the type of debt and which creditor. Here are six places to start looking.

• (1) Free small business mentor.
• (2) Women’s business center.
• (3) The IRS.
• (4) The agency you owe.
• (5) Credit counseling agency.
• (6) Bankruptcy court.

Before calling anyone, make a list of who you owe, how much, whether you’ve missed payments, what assets you have (home, money in the bank), how much you earn each month, and how much you spend. Then think about what you really need: a week to send a payment, advice, time to pay the debt back, or court protection. That will determine where you can get it.

Free or Low-cost Business Counseling

If you are unsure about where you stand, a good place to begin is with a mentor who will walk you through your options. It’s a free resource that’s often overlooked. SCORE is an SBA partner, and the largest network of free, volunteer business mentors. They also provide advice on financing.

Women’s business centers are SBA-backed, and provide business owners free or low-cost business counseling and training. This is not just for those who can’t afford to pay an accountant.

Payment Plan

If you owe taxes, it’s possible to work out a payment plan directly with the IRS. Since December 3, 2025, small businesses who owe payroll taxes up to $25,000 qualify for the Business Simple Agreement. If you can’t afford to pay, you can make an Offer in Compromise. Applying requires payment of a $205 application fee, but businesses do not qualify for the low-income fee waiver. Also, the IRS wants to see that you’ve made federal tax deposits for the current quarter, and for the two past quarters.

If the debt is owed to another federal agency, the best advice is to ask for a repayment plan early. A debt of more than $25 owed to any other federal agency is sent to the Treasury’s Cross-Servicing department to collect. If it’s been 180 days since you missed the payment, it has already been referred.

Chapter 11 Bankruptcy

If debts are so large that creditors won’t negotiate, your business can file for reorganization, or Chapter 11 bankruptcy. This allows the business to keep running, and creditors are repaid over time per the terms of a court-approved plan. Under Chapter 11, the business owner usually stays in possession of the business and continues to operate it. However, the owner can’t borrow money without court approval. Impaired creditors vote on accepting or rejecting the plan. After that, the bankruptcy judge decides whether to confirm the plan or not. A business owner can file a reorganization plan themselves within the first 120 days after filing. If more than 120 days have passed, creditors are eligible to compete with one another for how debts should be repaid. Cases of this type can take years to conclude. But there are steep court costs: $1,738 total in a Chapter 11. The total court cost for a Chapter 7 bankruptcy is just $338.

Filing for bankruptcy puts a stop on most foreclosure, repossession and collection attempts against your business. That’s a powerful pause, although it does not stop all collection efforts. A secured creditor can get the automatic stay lifted if, for example, the property securing the debt has no equity, and is not needed for an effective reorganization.

Smaller businesses now have Subchapter V of Chapter 11 reorganization bankruptcy to go to, if their debts are $3,424,000 or less. It’s designed to reduce costs and get a debtor up and running faster. There is a trustee in every case, whose job is to work with the business to come to an agreed plan. Under these rules, the debtor is the only one who can file a reorganization plan. The plan has to be accepted by the court as paying projected disposable income for three to five years. No automatic creditors’ committee is formed. To use Subchapter V, at least half of the debts owed must be connected with the business. You need a balance sheet, a cash-flow statement, and your most recent tax return.

It’s a serious issue if you lose your business. But what’s at stake in each type of bankruptcy case depends on your business structure. If you have a corporation, the case is just about that business, and only the stockholders’ investment is at risk. A partnership case may, in some cases, reach the partners’ assets personally. If you are a sole proprietor, as the business goes, so goes your personal assets. It may be that you’ll have to file as an individual. If so, you have to have gone to an approved nonprofit credit counseling agency within 180 days before you file.

No matter what debts you are looking to renegotiate, the best approach is to simply ask early and directly for help if you need it.