Declaring bankruptcy, whether in personal investments or in business, is not a procedure that’s life-ending. Sure, there are financial limitations placed upon those who declare it, assets are lost and debts are restructured, but in the end it is something that can be recovered from. However, to many people, going through this process seems to be the end of their financial road. That notion could be based on the seemingly eternal financial illiteracy that many people seem to suffer from, or it could be influenced by the somewhat strange notions many people have about declaring bankruptcy and investment failures.
While declaring bankruptcy certainly is not the end of any story, it is not the ideal outcome for any business. Before declaring it as a way to eliminate debts, it is wise to look at bankruptcy alternatives.
#1: Debt Consolidation
Debt consolidation is a relatively simple process that can ease the amount of debts that need to be paid, the process of paying those debts, and the interest rates that they operate on. By taking out a loan through a bank or specialist debt consolidation service, people can simplify the entire process by paying installments to only one debt. This is especially useful for people who are paying to several lenders at once and want to ease the process.
#2: Direct Negotiation
There are times when debtors just can’t make a payment, and need to strategically work out a solution to it. Missing payments can have massive secondary effects, from ruined credit scores to crushed businesses. It is best to avoid any dodged payments and focus on directly speaking with lenders. For many people, negotiating a payment plan with the bank will save a lot of time and stress, making the entire process of trying to eliminate debt simpler.
#3: Do Nothing
This can often, strangely enough, be the best option for debtors that are in dire financial straits. For those who are trying to eliminate debt but have relatively few assets that can be surrendered to lenders, the best solution is sometimes to simply quit paying. In many jurisdictions, debts are waived from people’s credit history after seven years, leaving them relatively free of worry afterward. However, this is an absolutely final option. Explore every other possibility before using this as your solution for it definitely not among the simpler bankruptcy alternatives.
#4: Debt Restructuring
People who are in a particularly bad spot but still want to continue their business, debt restructuring might be the best option. By directly negotiating with their creditors, it might be possible to change their payment options or debt levels. This allows people to continue their business without being struck down by the burden of endless debt and financial concern.
#5: Strict Financial Discipline
While all other major bankruptcy alternatives work by reshaping the debt, or occasionally avoiding it altogether, this one takes a more direct and stoic approach. The easiest way for people to eliminate debt is by completely cutting out any unnecessary costs from their lives. Whether that means eliminating luxury costs or selling assets, the decision is the same. People can minimize their personal spending, radically change the way they try to eliminate debt, and completely remove any unnecessary costs from their personal lives.
From restructured loans to direct negotiation, these five methods can help anyone eliminate debt while avoid the taxing procedures of court and focus on running (or recovering) their businesses.
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