Credit card debt typically has an association with individual people. However, it can also impact businesses that rely on credit cards to keep operations going smoothly. In 2015, there were nearly 14 million credit card accounts for small businesses in the United States.
Businesses are able to file for Chapter 7, Chapter 11 or Chapter 13 bankruptcy. The best type will vary from one company to the next. Most businesses expect to be in some debt for a little bit. After all, there is the old adage, “You have to spend money to make money.” However, it is important to know when debt is growing out of control. Before filing for bankruptcy, there are certain actions a business can take to try to relieve excessive credit card debt on its own.
Review and tighten budget
Business owners need to have weekly, monthly and annual budgets in place. When too much money goes to waste, it is paramount for the senior executives at the company to review the budget and see what requires removal. Most of the time, there is something the company can eliminate.
In the event a company has more than one type of debt with more than one creditor, then prioritization becomes necessary. Debts with high-interest rates should receive the greatest amount of focus. Companies should also try to pay off more than the bare minimum with each monthly payment.
Talk with creditors
Many business owners do not think to contact the credit card company to try to relieve some of the burden. While they will not get rid of it entirely, they may be willing to help restructure the payments.
In addition to reviewing the company’s budget, business owners need to see if they can sell a piece of equipment or vehicle. If there is more than one company vehicle, then it may be best to use one for the time being. Selling an expensive piece of equipment and putting that money toward the debt can help make a significant dent.