In the present time, business debt is inevitable but there are ways in which you can deal with such debts and get immense help provided you have all the documents of your business in order. You would also have to ensure that all the taxes are paid and current as it is the most vital part of a successful business. It would further ensure that the IRS or the state tax authority cannot hold you liable personally and charge penalties for such defaults in payment. It will also affect the bankruptcy proceedings in an adverse manner if you do not pay taxes on time.
Maintain A Cash Flow
When you are in distress, it is essential that you cut on your expenses to ensure that there are no cash problems. Keeping your expenses low and making only those which are necessary may give you that extra money required to make such repayments on your debts. Giving up all those extravagances and selling off the long laying scrap are some useful ways to cut off the extra expenditures. There must be a short term strategy for financial management which should include the entire amount that is outstanding to your business. Lastly but most importantly, you should keep on paying the essential bills. It is better done if you can work out a way with your creditors and suppliers to make deferred payments.
Be Honest Always
It is said that honesty is the best policy and it applies to business as well. You may be tempted to go to a bank or any other financial organizations during such hard time when you cannot repay your debts and try to acquire a new loan based on false information. You should avoid this practice as such fraudulent loans can hold you personally responsible to the creditors who can file a criminal case against you. Also, you should not try to save your business property by transferring them to your relative’s or friend’s names and hide it from creditors. Such attempts can also lead you to criminal charges and cause enough legal problems.
Discrimination Among Creditors
You should not discriminate your creditors and pay one avoiding the other. The bankruptcy law would see your history of credit payment and try to find whether or not you have the habit of favoring creditors while paying. Such preferential treatments would affect your bankruptcy claims adversely. You must also keep your bank account and debt account separate to avoid the surprise of seeing that the bank has withdrawn money from your checking account.
Insurance And Lease
It is beneficial if you renew and keep on paying your insurance premiums even if you want to declare insolvent as insurance company cannot cancel your policy if all your premiums are paid on time. You must return all the unwanted and non-essential properties taken on lease as such properties would be discharged during bankruptcy. Apart from all these you must also consider the pension plans, if any, carefully as there are plans from which you cannot withdraw money. Going for consolidation loans is a wise idea these days so as to make things easy for you and get yourself free from many loans. If you have not tried it yet just learn about it and you will surely find it useful.