Sometimes even businesses with the greatest ideas can run into financial problems. In some cases, no matter how much preparation, organization and management takes place, things can still go wrong. Some customers may decide to move their business to a competitor. Other businesses may find that their products are no longer necessary due to technological advances. No matter the circumstances, businesses that are facing bankruptcy do have a few options.
In the face of a financial struggle, bankruptcy may seem like the only option; however, it should always be a last resort. Before you even throw out the idea of bankruptcy, make sure that you look at your alternatives. Here are some for you to consider:
- Take a closer look at the current cash flow. Look at the money that comes into your business, as well as the money that goes out. Try to cut back on your budget, but make sure that you keep it realistic. If you must, cut back to just the essentials.
- Try a debt consolidation loan. There are many financial institutions out there that offer loans to consolidate your debts and give you a lower interest rate.
- Let your creditors know that you are struggling. They will definitely want to make sure that they are paid, but they may be able to work with you on a payment schedule that meets your needs.
There are a few other alternatives that you can consider as well that are a bit more formal:
- Division I Proposal. This is a method in which a trustee works to get your creditors paid back a percentage of what is owed over time. This will allow you to keep your business assets and avoid other legal ramifications.
Creditors Arrangement Act. This is only available to those companies that owe over $5 million to their creditors. They are able to get protection from the court and are able to stay in business while they come up with a plan to repay their debts.