Avoid Bankruptcy by Restructuring Your Business Debt

By on | Tax & Bankruptcy Law Information.

Avoid Bankruptcy by Restructuring Your Business Debt

Even though filing bankruptcy can help an overburdened business avoid liquidation it will also effectively ruin your credit and make applying for loans and lines of credit nearly impossible. Though bankruptcy can pull you and your business out from under an insurmountable mountain of debt it is best left as an absolute last resort.

One easy tip for stimulating interest and income is to discontinue your lesser or struggling products or services. If they aren’t making money, focus on your core products or services until your business is more stable.

Crunch the numbers on your operational costs. Research your healthcare and benefits providers, your utilities providers, and the companies that provide you with services or products that you need to run your business. If you are meticulous you can often find better deals with companies who can provide you what you need for cheaper.

Unfortunately, if its feasible you may want to consider downsizing to help you get you manage your debt.

If your business is incorporated, buy back shares from investors and offer these to your creditors. Don’t sell off your own shares and relinquish your stake in your company.

Research options to consolidate debt. Debt consolidation is the process of combining all your debts into one payment and negotiating the amount that you owe your creditors. Usually people who fall into debt panic and try to hide from their creditors. Creditors are people too, and all they want is the money they are owed. Therefore, they are very willing to negotiate. After all, receiving most of your payment is better than receiving none of it.

As you research debt consolidation services check with your local Better Business Bureau to make sure the company you settle on is licensed.

Offer your creditors equity in your business. However, make sure that the equity does not give your creditors control over your company.

Hiring an attorney or debt management agency to handle negotiations with your creditors will help you in the long run. They have more experience and backing than the lowly business owner.

Negotiate a payment plan that you can afford and make sure that you make timely payments to your creditors from here on out. If you start to see yourself falling behind on payments for your new payment plan, contact your creditors. Keeping your creditors in the loop is much more beneficial than avoiding them. The more they know you and your business the more likely they are to cut you some slack.

Using these tips to get out of debt and avoid bankruptcy could mean the difference between turning your business around and closing your doors. Stay active and aware in your finances, communicate with your creditors and make every cent count.