Being in tight finance situation can create a whole mess in your business and can affect your business strategies significantly. Many people have faced the problem of debt with their business companies, so it is not something new that we never heard of. However, we rarely hear that someone, who got stuck with financial assets, found a great solution for the problem. You either opt for debt settlement, counseling programs, loans or bankruptcy. We will talk here about bankruptcy and debt consolidation as your chances to renew your business.
Debt consolidation – why do people opt for this solution?
Secured loan looks like a perfect solution because you will pay the debt you have and continue with your life. However, many people say that we don’t solve our problem but rather cover it with another one if we decide to go with the debt consolidation. The debt consolidation is a replacement for few credit card debts, so you will pay only one debt instead of those that you already had. Note that this strategy is great for improving your credit score, but it requires to make the new payments regularly. In other words – you need to have a proof of your employment or steady source of income. Also, you will be required to provide some sort of security that you will your debt. It is usually in the form of a car or a house.
Bankruptcy – a solution when you don’t have anything else
First of all, to fill for bankruptcy, you need to meet some conditions that are regulated by the Chapters 13 and 7. So it all depends on your situation. However, bankruptcy is a way out for people who cannot apply for debt consolidation. Bankruptcy removes all your debts but also your property and other assets that you reported. It is a severe method for getting out of the financial problems and starting your new business, but many people go for it because they see it as a way out. However, bankruptcy will stay visible in your credit records for up to 10 years. Also, note that student’s loans and child support are not included in the bankruptcy.
Which one to choose if you are in the difficult financial situation?
Business must go on, no matter what, but its direction depends on the financial situation. Bankruptcy is good for people who have a lot of debts and want to start their business from the very beginning. They have nothing to lose, so it is a great way out of the trouble. On the other hand, if you don’t want to lose your business completely but rather to pause it or work less, debt consolidation is the method for you. Not only you will cover your debts, but you will not lose your business at all.