If you are a small business owner and are struggling to manage your debts, you certainly need some professional help to successfully meet your debt obligations. Rest assured that you are not the only one in this situation. Statistics demonstrate that thousands of small business owners in America find themselves in major financial distress. Most of them resort to frugal way of life to survive and often use one or more debt relief options for small business owners.
Debt Consolidation Loans: A Smart Choice
In case your business is able to fulfill some specific criteria, it would qualify for suitable debt consolidation loans from some non-profit lender. These sort of loans usually come at lower interest rates as compared to the loans offered by private agencies. It would result in lower and affordable monthly debt repayment.
However, if you are not able to secure non-profit debt consolidation loans, you may turn to reliable private debt consolidation companies. You could offer certain business assets as collateral required for your loans. This would help you get lower rate of interest. Remember this involves a major risk. In case delinquency issues arise, you are at a risk of losing those assets.
Debt consolidation loans are quite effective as they assist in paying off all your previous unsecured debts and roll all your obligations into one single monthly payment. This really works out best for a busy small business owner who has neither the time nor the willingness to manage manifold monthly debt repayments.
Declaring Bankruptcy: Worst-case Scenario
If you have come to the conclusion that declaring bankruptcy is the only way out for you, trust me, you are not the only one to take such a decision. As per current studies, thousands of American small business owners are compelled to do so every year. Post the housing bust in recent times and the ensuing financial crunch, these numbers have actually gone up. Though there are many valid reasons for you to stay away from declaring an expensive bankruptcy, there is actually no embarrassment in taking the final plunge for immediate debt relief.
Bankruptcy reorganization is primarily of two types- Chapter 11 and also, Chapter 13. These two forms of bankruptcy restructuring assist small business owners in renegotiating the terms of their unsecured loans and credit card debts. These steps help in easing your financial stress and pressure to some extent and you can now divert your attention to boosting sales or identifying other revenue sources. Every year thousands of small business owners in America are able to keep their businesses running thanks to the restructuring process.
Though these two types of bankruptcy can affect the credit scores adversely, these measures of debt reorganization focus on helping small business owners and make them avoid declaring Chapter 7 Bankruptcy, which is the worst-case scenario under the circumstances.
Debt Settlement: A Viable Alternative
Though there are some glaring differences between business debts and consumer debts, many of your business obligations would qualify for debt settlement. The fact remains that practically each and every unsecured debt is actually eligible for debt management through debt settlement process. This step is quite similar to restructuring, but it does not damage credit scores as intensely. Debt settlement process involves reducing debt balances by negotiating with your unsecured creditors.
Though one case differs immensely from another, generally speaking it would be possible for reducing all your unsecured debts remarkably through debt settlement. Debt consolidation takes quite a lot of time whereas debt settlement takes less time in comparison.
Author Bio: Morris Beattie is a journalist and financial adviser. He has been involved in this line of work for well over a decade. He enjoys blogging too, and tries his best to explain complex matters like debt relief including debt settlement and bankruptcy to laymen.