Experienced debt relief attorneys can help you if your business is suffering because of accumulated debt. Additionally, here are seven areas to consider:
1. Cut unnecessary costs and free up cash
Identify the parts of the business that got the company into debt in the first place and attack them head on to free up much needed cash. If customers aren’t paying on time or your expenses are too high, consider ramping up collection efforts and ditching less critical expenses, such as office space or costly phone systems. You can also sell unused or unwanted equipment.
2. Budgeting expenses
Create a short-term budget based on the business’s current financial situation. The simplest of budgets will make certain your business’s revenues can cover your fixed monthly costs, such as rent and utility bills, and then some. A more complex budget will then allot a portion for variable costs, such as manufacturing materials. If your business is fortunate enough to have money left after this budgeting exercise, you should use that to pay down the business’s debts. An inexpensive way to help you keep track of your budget is to use accounting software like Intuit’s QuickBooks or Quicken, Sage Software’s Peachtree, Sageworks’ ProfitCents, MS Money or web-based programs, such as NetBooks
3.Prioritize debt payments
The best way to tackle your business’s debt is to address the highest-interest rate debt first. Plan on making additional payments on those high-interest rate debts first and allocate any leftover funds to paying down other debts, leaving debt with the lowest rates for last.
4.Talk to your creditors
It may seem like common sense, but just talking to your creditors and letting them know the situation may be all you need to help your indebted business. Ignoring your lenders can make matters worse, while tackling a debt problem is easier when you act early. Ask if they have a hardship plan that may provide better payment terms. If the creditor doesn’t offer one, request a payment plan or a reduced settlement amount. Since it’s in everyone’s interest to find a solution, request that your lenders work with you to lower interest rates, increase your credit line or restructure your repayment options. Just make sure you can fulfill your end of the bargain: Nobody wins if all a business owner can do is set up a repayment plan with a creditor and default.
5. Consolidate your loans
Consolidating your loans into one payment allows you to reduce monthly costs without harming your credit. The best-case scenario is consolidating several shorter-term loans into one long-term package.The loan may be unsecured or secured with business assets.
6. Seek Counsel/Outsourcing
Negotiating with creditors can be a harrowing experience. If dealing with multiple creditors is taking you away from the more important task of running your business, you can outsource your debt problems to a professional debt relief company. A reputable firm may be able to negotiate with your creditors on your behalf to settle debts for less than what is owed.
7.Chapter 11 Bankruptcy
Chapter 11 bankruptcy can be used to salvage a business that might be succeeding if not for its crushing debt. Chapter 11 bankruptcy is an expensive and complex process, requiring the services of an experienced bankruptcy attorney. Any person or company that files for bankruptcy under Chapter 11 must pay $1,046 in filing and administrative fees, which can be paid in installments. Typically, portions of the debt are forgiven and debts and assets are reorganized for maximum potential for business success.
If you need help getting your business out of debt, call the experienced debt relief attorneys at DCDM Law Group today!