subject: Preparing for Debt Settlement Issues [print this page] Preparing for Debt Settlement Issues Preparing for Debt Settlement Issues
Because of the economic crisis hitting the country, many businesses have a sudden need for more monetary infusion in order to stay operational. Some businesspeople considered various financial options like traditional bank loans, collateral loans and even business cash advances as part of the effort to fortify their trade and see them through the crisis. As a result, some of these businesses found themselves in debt after a long battle in the past years.
Although many entrepreneurs continue to make regular payments, some experience trouble doing the same since they are still recovering. For this reason, many are now reconsidering their options for paying off their monetary obligations. A good example is by agreeing to debt settlement agreements that may offer different financial schemes for paying off debt over a certain period.
There are three common ways to do settle debt: the do-it-yourself approach, the lawyer-to-lawyer scheme and debt settlement. While anyone may choose to pay debts within these options, there are some necessary steps to take before an entrepreneur can start effective negotiations.
Prepare your books and look at your reports carefully. You can begin your debt settlement by analyzing your current economic standing and see where you can actually secure payment. For example, if you can reduce the budget of a certain area in your business then you can use the money you save to pay off debts.
Consider selling some assets that are of no use to your business. For instance, if you have property that does not generate income and functions more as an annual tax obligation, you should consider selling the property for debt settlement purposes. By doing so, you can potentially avoid two financial headaches with one shot.
Expect to have reduced income. If you plan to go for debt settlement without resorting to selling assets, you can also try reducing your personal income from the company and allotting the rest of your supposed salary for paying off debts. Here's a word of caution, though: you may only do this if you already allot a personal salary from your profits instead of considering profits as your total income. If you do not have a fixed salary each month from your business, you cannot simply do this step without revising your business practice.
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