“I have approximately $150,000.00 in credit card debt. It got that high financing a small business, however the credit cards are personal and business credit cards. I have $50,000.00 l.o.c. with my house as collateral included int the 150k, The rest is unsecured. I am not sure what to do, I don’t want to loose any opportunity to get out of debt. The business was in a warehouse where we were locked in for two years. We did that in October 2007 and then in 2008 the economy went bad and 2009 was horrible.
We are now working out of our home and business is slow but at least we don’t have the overhead. I don’t want to lose the ability to get loans if we need to finance a project, but I don’t see us being able to pay this debt off without working ourselves to death. I will also email you.”
Well even though the credit cards may be business cards I would bet the farm that in the fine print you personally guaranteed the debt. That means that all of the business debt is going to be your personal responsibility even if you decide to close or bankrupt the business.
I know you don’t want to lose the ability to get loans to finance more projects but your issue is you are already drowning in debt. And that’s the result of overcommitments during a time, and for whatever reason, your business could not support it.
Since the line of credit and credit cards are secured with your personal credit, the only real option you have to to consider personal bankruptcy. If the business is a corporation or LLC you don’t need to drag the business into bankruptcy but you will need to tackle this problem debt in a way that is binding on your creditors and stops collectors from hounding you so you can focus on bring the business back to a profitable life.
The other way to retire the debt so you can live within your current business income would be for income to accelerate but I think that might not be a reasonable expectation in your current situation.
If you get the debt under control with bankruptcy you can then live within the income generated by the business as it recovers and that will give you the best chance of continuing the business for a long time to come. As the business improves so will your personal situation.