Not
ready to close your business? Proven steps for turning failing
business around.
Some business owners feel as though they are against a wall with
debt and contractual obligations. They are exhausted. Their leases,
loans, and contracts pile up, while their money dwindles. Their
business is ruling their life and they just want to get out.
As a frustrated business owner, you may find yourself in this
situation. You may have tried to turnaround your failing company
with little success. And if you have no buyer on the horizon, you
may have decided you've had enough. It's time to close your doors.
But how do you go about doing this? You will find rows of books
at your local bookstore that cover how to start a business, but
little on how to close one. How will you meet the obligations of
your loans and lease? Do you owe money to the IRS, individual agencies,
or contract workers?
There are many items to consider when you close a business. And
you have some choices to make when it comes to getting rid of debt
and folding your company. Let me explain.
Straight
talk about business bankruptcy and closure
Debt relief 101: Understanding your options and avoiding the scams The total consumer debt in the United States has ballooned to over two trillion dollars a full 100% greater than it was just a decade ago. As a result more people than are in need of debt relief services. But like with all burgeoning industries, there are a number of scams and ineffectiveness in many debt relief services. As a result, it is important that consumers considering debt relief know their options.
Debt Consolidation
The most well-known form of debt relief is debt consolidation. The principle behind debt consolidation is that by combining the many small debts, many of which are very high interest such as credit cards, under a single lower interest loan, you can get control of your debt. Under the single lower interest loan, the overall cost of servicing the debt, that is your total monthly payment, is lower than the combined total of the many smaller debts. That at least is the theory behind all debt consolidation programs.
Many programs go further, however, by limiting your discretionary spending. The theory goes, that because you have accumulated so much debt through your own uncontrolled spending, the debt consolidation lender will in effect act as your accountant too. The limitations placed on you by debt relief programs range from prohibiting major purchases like as a new car or home, all the way to those organizations which take your paycheck before you get it, and then dole out to you the remainder. While the latter version sounds intrusive, and certainly it is, it may prove for some individuals the best option as it will force a rationing of discretionary spending. But one thing you can count on with almost every debt consolidation program is the requirement that you cut up all of your credit cards. As credit is the number one contributor to consumer debt today, that isn’t all that bad of an idea.
Creditor Negotiations
But debt consolidation isn’t the only option available to those in debt crisis. Another option is to hire a creditor negotiator. These services, usually under the name debt management or debt managers, mediate negotiations between you and your creditors in the hope of lowering your total debt. In effect, these individuals bargain with your creditors, threatening them with the possibility of you seeking bankruptcy (in which case they get almost nothing) to try to get them to lower the interest rate, or the principle of your debt. This can be a very effective method for those unable or hesitant to secure a new larger debt through a debt consolidation loan.
The problem with both of these options is that they do not come for free. While many organizations present themselves as non-profit or even public servants, the reality is that almost every agency is in business because of the profits they can make off of you. For example, many individuals in need of debt consolidation are so thankful to find a willing lender that promises to lower their monthly payment, that they fail to examine closely the loan contract they are offered.
The Negatives and Scams of Debt Relief Programs
A common scam is to hide huge “service fees” or “debt consolidation fees” in the principle of the loan. So, if for example you have $50,000 in outstanding debt, your debt consolidation lender may provide you with a loan as high as $80,000, where the extra $30,000 is comprised almost entirely of fees. The lender then extends the loan out for years and years, so that your monthly payment is actually lower and as a result you do not ask any questions. Another, even more devious scam is to vary the interest rate over the life of the debt consolidation loan. For example, the lender might offer you a loan in which for the first two years the interest rate is an extremely low percentage, say 4%. But very quickly, the interest rate balloons to something like 15% at which point you will no longer be able to make payments and must go back to the lender and “consolidate your debt” once again.
But debt consolidation lenders are not the only one’s trying to scam you. Creditor negotiators seem to offer a problem-free solution to your debt troubles. They offer to negotiate with your creditors, making the process seem infinitely more complex than it actually is. In truth, many individuals can simply negotiate with creditors themselves. The threat of bankruptcy is very real for many lenders, and as a result many are willing to offer you alternatives to the current high interest rates they are charging you. By cutting out the middle man credit negotiator, you can save much by way of charges, for the rather minimal hassle of calling the creditors yourself.
Both debt consolidation and debt management services fill important niches in a world where consumer debt is increasingly prevalent. It is important to remember, however, that these companies make money off of you. And because the industry is in a stage of rapid growth there are a great number of companies working on the edges of the law if not engaging in outright predatory lending. By entering the world of debt relief you are entering the world of scam artists and sub-prime lenders. Educating yourself before you enter the arena is the only way to ensure that you attain the best debt relief for you.
About the author:
Dan Johnson enjoys writing about debt relief. Visit http://www.debtrelieflowdown.com/to learn more.
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Straight
talk about business bankruptcy and closure
Credit Repair System
The has tools available that helps many debtors find relief. Credit repair system is the steps to recovering from debts, while getting back on your feet again. If you have bad credit, you already know how difficult it is to reestablish a respect in society. Struggling down many roads, I know you have asked over in your mind, “How can I get out of debt?” The truth is we all have had bad times and some of are able to get back on our feet again quicker than others do. Therefore, you are not alone in this fight to reestablish credit. Even rich people have filed bankruptcy, so do not think you . . .
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