I’ve been a business owner for 20 years and along with my partner, we’ve managed to make a pretty decent living in the construction supply and service industry.
Years ago, when we started our company, we established credit lines and credit card accounts in our personal names to help fund projects and equipment that are required for daily operation. Subsequently, the struggling economy of today’s market and lack of construction work in our area has left us in financial trouble since November 2008.
We have been able to pay our corporate obligations, which has kept our business credit good but have elected to laps on our “personal credit card accounts” in order to protect the company interest. My business partner has elected to enroll in a debt settlement company to clean up his personal debt (about 40K) and I’m wondering if that was a good idea?
As for myself, I have written my credit card companies and explained my situation – but have not pursued any professional help as of yet. I did ask that my credit card companies stop calling me, and that worked, but I fear the uncertain future.
Our company has the ability and a track record of obtaining large dollar contracts that could easily wipe out this debt. However, in our current situation, the inability of banks to lend money, increasingly high interest rates, and the state of the economy in general, do you suggest we hire a debt settlement company and hope for the best? Or, do we work with our creditors and try to buy time?
My personal credit card debt is 42K. To be honest, I am divorced and my personal assets are absolutely nothing. I rent, I have a car that’s worth about 100 dollars on a good day, and I “had” excellent credit until this crisis occurred. Should I “roll the dice” with a debt settlement plan and see if a big contract arrives at work?
I can not afford a DMP because the monthly payments are ridiculous– out of the question. Should I file bankruptcy?
Should business owners get involved with debt settlement?
Thanks – Paul”
Debt settlement is not a silver bullet and has no magical powers unless you have the cash on hand to settle. The logic behind debt settlement has some value but most debt settlement companies out there are just going to wind up taking your money and leaving you in worse shape. See what happened with the attorney owned debt settlement company of Allegro Law. I also think you should take a look at the success rates of debt settlement companies.
I am assuming that the business is incorporated. If so it is a separate legal entity. You could trash your credit and shed your obligations in bankruptcy but that only makes sense for the business if you can get by without access to your credit. But the reality is that you are already doing that since you can’t afford the payments on the debt that you’ve got.
As I see it you have a couple of choices here. You could go personally bankrupt to keep the business running or you could close the business and move on to a job where you might make enough to service your personal debt.