All over the news we're seeing announcements about companies slashing jobs and the rising unemployment rate. What we don't often hear is how the economy has affected small business owners, a category that many consider to be the engine of America's economic prosperity. The truth is that as the economy has crumbled and jobs have been lost, people have tightened their budgets. With less spending, small businesses across the country have seen dramatic drops in revenues.
Unfortunately, for many business owners, this means that they have had a hard time meeting their own expenses. Some are able to react quickly, often by way of cutting costs, and have therefore been able to weather this economic storm. Many, however, haven't been as quick to react or simply don't have the wherewithal to do so.
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What usually happens to these business owners is that they turn to financing and easy credit to meet expenses. They assume that the poor economy will pass and things will pick up again. What starts as a few thousand dollars on some credit cards can easily snowball into tens-of-thousands in debt if things don't go as planned. Now they have a problem.
So what happens when a business owner finds themselves staring down a mountain of debt with no way out? Many consider filing for bankruptcy. When the hopelessness of the situation really sets in, bankruptcy often appears to be the only option for many business owners. While bankruptcy may make sense for many businesses, it certainly isn't for everybody.
But what can a business owner that wants to keep their company open and get out of debt actually do? Interest rates and penalty fees pile onto what already seems like an overwhelming amount of debt incredibly fast. That's where a professional debt restructuring firm can help implement an effective plan to pay down those debts and avoid bankruptcy.
Debt restructuring is a method of budgeting and negotiating. First, an amount that you can realistically afford every month will be determined. This means looking at all of your critical expenses, not including the debts to be restructured, and calculating how much money is available after they've been paid. Next, your creditors will be examined to determine which should be included in a restructuring and which should not. Then, affordable settlement terms are negotiated with your creditors, collection agencies and attorneys. The key in this negotiating process is to work out a plan where all of your creditors eventually agree to settlements that fit within your limited budget.
Negotiating business debts isn't easy, which is why it's often recommended that you seek a professional debt restructuring firm with a proven track record of success and a solid reputation. Check their rating with the Better Business Bureau. Ask for copies of successful settlements, written testimonials and even references that you can speak to over the phone. Any claims of affiliation with trade associations or appearances in the media should be confirmed to be true. The important thing is to do your due diligence so you can be sure that you're dealing with a reputable firm.
Keep in mind that while many business owners can get out of debt and avoid bankruptcy using this route, not everybody will be successful. Some businesses are simply too far gone or just don't have enough income to dig themselves out. Bankruptcy is nothing to be ashamed of. Just as it's recommended to speak with a reputable debt restructuring firm, it would also be wise to find a bankruptcy attorney with solid experience dealing with small businesses. Deciding how to deal with a mountain of business debt is an extremely important decision that should only be made after all options have been thoroughly reviewed.
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