Debt Settlement and Restructuring Strategies: How to Recover Money When the Debtor Has Genuine Problems?

Debt Settlement and Restructuring Strategies: How to Recover Money When the Debtor Has Genuine Problems?

In an unstable business environment, any entrepreneur can find themselves in a difficult financial situation. An unpaid invoice does not always indicate a contractor's ill will, but often their temporary difficulties. In such moments, traditional, aggressive debt collection may be ineffective and even harmful to future business relationships. What to do when the debtor declares their willingness to pay, but currently lacks liquidity? The key to success may be a strategic approach to debt settlement and restructuring.

At Egzekucja, with over 20 years of experience in recovering debts, we know that flexibility and professional negotiations are often the fastest and most effective way to recover money, minimizing the risk of a long and costly court process.

When to Consider Debt Settlement or Restructuring?

The decision to negotiate a settlement or restructuring is not a sign of weakness, but a thoughtful strategy. It's worth considering when:

• The debtor shows good will, but has temporary liquidity problems: You see that the contractor does not avoid contact and sincerely presents their situation.
• You want to avoid a lengthy court process: Court proceedings and executions can be costly and time-consuming, especially in the case of international debt collection. A settlement may provide a faster solution.
• You care about maintaining business relationships: You don't want to lose a valuable partner who may again be a reliable customer in the future.
• There is a risk that as a result of court execution, you will not recover anything: If you know that the debtor does not have valuable assets, a settlement, even for a partial amount, is better than nothing.

Key Negotiation Strategies with a Problematic Debtor

Success in settlement negotiations requires precision, empathy (but with one's own interests in mind) and solid knowledge. Here are proven strategies:

• In-depth analysis of the debtor's situation: Before proposing a settlement, try to understand the contractor's true financial condition. Is it temporary liquidity problems or deeper insolvency? Services such as Contractor Verification can provide valuable information that will allow you to assess their real repayment capabilities and risk.
• Proposal of a realistic repayment plan (installment schedule): Instead of demanding the entire amount at once, propose dividing the debt into installments. It's essential for the schedule to be realistic for the debtor, but also acceptable to you. In a settlement, you can include a provision for interest on late payments in case the payment terms are not met.
• Reduction of the principal amount or interest: Sometimes, the only way to close the case is to partially waive the debt or give up some of the interest. This is a difficult decision, but it may be more beneficial than fighting for the whole amount, which will consume time and resources without guaranteeing success. We always analyze such a solution in terms of profitability for our client.
• Establishing security: In exchange for agreeing to a settlement, you can demand additional security from the debtor, such as a blank promissory note, mortgage on real estate, pledge on movable property, or voluntary submission to execution in the form of a notarial act. This gives greater certainty that the settlement will be honored.
• Clear and precise formulation of the settlement agreement: Every settlement must be drawn up in writing and include all key elements: the exact amount of debt, payment terms, deadlines, interest rules, consequences of non-compliance, and any security. Professional preparation of such a document by a lawyer is absolutely necessary to avoid further legal problems.

Example: A transport company (client of Egzekucja) had to recover a significant amount for freight from a German forwarder. The forwarder reported temporary financial problems but also offered a repayment schedule spread over 6 months and security in the form of assignment of claims from one of its key contractors. Thanks to negotiations conducted by the Egzekucja team, it was possible to work out and legally secure a settlement that allowed for the recovery of the entire debt in the agreed installments, without the need for a costly and lengthy court process in Germany.

The Role of a Professional Partner in Debt Settlement and Restructuring

Negotiating settlements and debt restructuring is a complex process that requires not only knowledge of the law but also experience in conducting difficult conversations and financial analysis. At Egzekucja, we offer:

• Comprehensive case analysis: We assess the real chances of recovering the debt, analyzing the debtor's situation and available documents.
• Professional negotiations: We conduct conversations with the debtor, representing your interests and striving to work out the most beneficial solution.
• Legal support: Our lawyers prepare and verify all documents (settlement agreements, security), ensuring their full compliance with the law, both in Poland and within international debt collection thanks to our network of partners.
• Success fee model: You only pay when we successfully recover your debts. This minimizes your risk and is proof of our commitment.

Don't let problematic receivables become dead capital. Active debt management, including a strategic approach to settlements and restructuring, is the key to maintaining your company's financial liquidity.