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Businesses with Financial Difficulties

Posted by on Jun 17, 2013

Running a businesses, paying employees, investing in inventory and paying off vendors can sometimes put a business in financial constraints. Some business owners immediately think of bankruptcy as a solution, but bankruptcy is often not the best or only solution. Filing for Chapter 11 today is more difficult than yesterday. The 2005 bankruptcy laws are more geared towards forcing businesses to pay off their financial obligations instead of offering legal protection. The required paperwork is twice as much, and the costs for bankruptcy can range up to $50,000 for a small business. It’s always wise to seek debt counseling services before going ahead with bankruptcy. With debt counseling services, you can get a professional financial counselor to look over your books instead of a court appointed attorney.

Business Debt Restructuring

If your business is in a delinquent debt situation, a financial counselor at a debt counseling agency can assist you with business debt restructuring to help alleviate the financial distress. With business debt restructuring, business debts are assessed, and a plan is put in place to pay creditors while the business remains in operation. It’s often a better way for a business to get out of debt and keep creditors satisfied.

Debt Consolidation

Business debt consolidation is available for both small and large businesses, regardless of the debt amount owed. With a financial counseling agency, your certified counselor can help you establish a debt consolidation plan with your creditors. All of your business’s debts will be assessed and placed under one debt. The financial counselor will also negotiate with your creditors for lower interest payments and to waive any late penalty fees. They will also negotiate a repayment plan that is doable, so you can stay in business. Financial counseling agencies often have strong business relationships with banks, creditors and credit unions. If you’ve tried to negotiate with your creditors on your own and have been unsuccessful, it is likely that a financial counseling agency will have better results.

These financial counseling agencies can also give you advice on business operations, including money management and what clients to extend credit to. In addition to private consultation, they often offer free business workshops and business resources online.

Whether you’re a small business or larger operation, it’s best to know all of your options before considering bankruptcy. Unfortunately, many businesses that opt for bankruptcy usually wind up with additional debt.