Operating a business can affect your personal finances, especially if you put a lot of your savings into starting your company. If you run out of money or cannot pay back creditors, you may need to file for bankruptcy protection.
As part of the process, you may have the option of renegotiating the debts you owe. Working with creditors to reevaluate payment terms may take time and require some sacrifice. Knowing some tips for effectively renegotiating your debts may help you secure a new and more feasible payment schedule.
Be realistic
As your business grows, you may experience growing pains that impact your cash flow. Changes to the economy, mismanaged funds and even changes to tax laws may leave your business unable to come up with the money to pay creditors. According to the Consumer Financial Protection Bureau, prioritize your debts and come up with a realistic plan to pay everything off.
Sometimes, this process may require the support of a bankruptcy filing. This decision may allow you protection from predatory creditors who harass you for payment. Once you have developed a realistic timeline for your payment, you can present your plan for approval.
Be prompt
If approved, it is more critical than ever before for you to promptly pay your bills. Make a payment schedule for yourself and carefully monitor your finances to ensure you have the adequate cash flow to cover your expenses. If at any point you worry you cannot make your payment on time, immediately notify your creditor.
Contrary to what some believe, bankruptcy does not have to end your business. Rather, you can use this resource as an opportunity to reorganize your debts so you can continue to operate your company and regain control of its finances.
