If you’re a small business, it’s easy to understand why you would want to try and avoid declaring bankruptcy. Your whole life is pretty much tied up in your business.
While running a small business may be a joy, and the very thing you have always wanted to do with your life, sometimes economic reality hits hard. The reality these days is that the overall economy of the nation is suffering so badly that people have all but stopped buying things they consider to be a luxury or unnecessary.
If you own a business that caters to people who had disposable income prior to the recession, you will be feeling the economic pinch now. Unless your clientele is high end, rich and famous people who always seem to have money, your business may be in deep trouble. Many entrepreneurs try to make it against all odds and will juggle payments madly to keep from going under.
Interestingly, especially these days, is the fact that many banks, etc., are willing to barter the debt down, particularly if there is help from a credit counselor. This type of intervention will often make the difference to the enormous debt small businesses are facing by reducing it to perhaps as little as a few cents on the dollar.
While the bottom line here is that the bank does not get back its full initial loan, they are getting some return on the dollar, and this is a much more equitable solution to both parties rather than the final knell of bankruptcy. With a bankruptcy, the banks would lose the full debt owing, thus any return on their initial investment may be a welcome solution to a difficult situation, thus allowing the business to continue and the bank to recoup some of their funds.
If this kind of solution does not work because the businessperson was unable to make the negotiated payments, then all the assets of the business are sold and the cash is given to the bank(s). There are other solutions to ride out the worst of the recession, and those include snagging low rate loans, divesting yourself of expendable assets, finding an Angel investor, and asking employees if they are willing to take a pay cut to still have a job.
Patrick Warwick is the lead content contributor for Chicago bankruptcy firm, The Law Office of Jay F. Fortier, P.C.. To speak with a Chicago bankruptcy lawyer or learn more about creditor rights, Chicago bankruptcy, Chicago bankruptcy lawyer, Chicago bankruptcy attorney, visit Westsidebankruptcy.com