Small Business Debt Solutions

: Chris Lee Law Firm

  Filed under: Debt

business debtDebt burdens are not something anyone wants to be faced with, especially when you cannot afford to maintain payments. While debt in personal finances is troublesome, business debts can be far more detrimental. When it comes to resolving business debts, the options are a bit more limited.

Dwindling Options

Small businesses face tough challenges each day. Not only is remaining operative and profitable a challenge in today’s economy, business vendors and creditors can be far more ruthless than in personal debts. Small businesses risk going out of business quickly if debt issues arise and may find it difficult to find resolution.

Debt negotiation is one option for small business owners to resolve their debts, but even in negotiation they are not likely to be extended the amount of options as an individual would be afforded. It is rare for a business debt to be eliminated or settled and continue to remain in operation. Businesses may be able to negotiate better contract terms or lower interest rates, but obtaining a principal write down is highly unlikely. Businesses may be able to negotiate a shareholder agreement, in which creditors are given access to portion of future profits before the business takes its share.

Outside of negotiating contract terms, interest rates or shareholder agreements with creditors, small businesses may end up filing for bankruptcy to resolve their debts. They may find they can restructure their debts and regain control over their finances in a Chapter 11 case. Others may end up liquidated assets in order to satisfy debts to creditors in a business Chapter 7 case.

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