Solutions for Business Credit Debt
by Joey Papa
If your business has acquired large amounts of credit debit and you're looking for solutions, there are ways to help alleviate the financial burden of the debt. Many businesses come to the crossroads of making tough financial decisions and considering other possibilities to find solutions for business credit debt. It's important to always consult with your financial adviser or accountant before making any significant financial decisions regarding your credit debt.
A consolidation loan should be your first line of defense when it comes to finding a good solution for business credit debt. A consolidation loan is a bank loan given to a business that enables the business to pay off a large portion or all of its debt. The consolidation loan places all the debts into one large loan, with a lower APR and monthly payments. A consolidation loan can make paying off the debt easier in a shorter amount of time. Talk with your local bank about the options that are available for you and your business.
Debt settlement is used to avoid bankruptcy. Debt settlement is very much like a short sale in the real estate industry. Debt settlement is the process in which you negotiate your current debt with your creditors by paying them one lump sum of a portion of the debt owed. In order for a bank to consider you for a settlement option, you must stop paying on your current credit debt. While there are many companies that can help you in the process for a fee, debt settlement can be accomplished on your own. After 4 months of not paying on your credit debt, you may be able to negotiate your debt down to 50 percent less than what you owe. This process should be done with caution and under the supervision of your accountant.
Bankruptcy is an option for a business that is in financial crisis. Bankruptcy allows the company to be forgiven of all unsecured debts owed. Declaring bankruptcy will cut off most of your company's access to credit, causing a snowball effect of financial difficulty, leading to going out of business. Consult with a lawyer before making any decisions pertaining to bankruptcy as bankruptcy is a legal matter and requires the use of a lawyer trained in this field.