Every year, a large number of businesses and individuals head to the bankruptcy courts for protection. In the process, these business and people do a significant amount of damage to their creditworthiness. While bankruptcy should be considered a viable solution to major debt problems, it should be reserved as a last resort.
As an alternative, we recommend that companies look at debt restructuring. The debt restructuring process offers a company or person a fair opportunity to make debt payments. I can allow them to get back on track without having to endure the negative implications of bankruptcy. A top Peoria IL Debt Solutions law firm may be able to help you or your company negotiate with lenders and save you money in the process.
In order to help you better understand the debt restructuring process, we would like to explain five things you should know about the process before you move forward.
1. Debt Restructuring Requires Patience and Discipline – The debt restructuring process will require you to be open and honest with your lenders. There will be disclosure forms and documents that need to be filled out and submitted. Once the information has been received, your lenders will need time to make a decision. If they are reluctant to offer any concessions, you might have to enlist an attorney for the negotiation process. In the end, you will need to be patient while the process runs its course.
2. Your Credit Rating Will Still Take a Hit – While you or your company’s credit score will be spared the “death” penalty that comes with bankruptcy, you will still encounter a significant hit to all relevant credit scores. This is especially true if lenders are asked to provide some debt forgiveness.
The good news is you should be able to immediately start repairing your credit by simply complying with all the new terms of you new loan(s) and making your debt payments on time. Failure to do so might leave bankruptcy as the only remaining option.
3. Better Terms – One of the great benefits of the debt restructuring process might be your ability to replace restrictive terms with more manageable terms. Once your lenders understand your difficulties, they will better understand how they can recover a majority of their funds in the shortest amount of time. If it requires them to offer a lower effective interest rate, debt forgiveness, or lower monthly payments, they might be motivated to do so.
4. Debt Restructuring Can Buy You Time – Businesses and our personal lives tend to run in cycles. When we run into debt issues, it might be because we have simply hit a lull or encountered a temporary bump in the road. By restructuring your debt, you can buy yourself enough time to allow relevant situations to mend themselves. It can also give you some much-needed stress relief, which can feel like a breath of fresh air.
5. Saves Money and Assets – A law firm that focuses on business law understands the nuances of filing for bankruptcy and debt restructuring. Given the nature of both processes, debt restructuring may well be the most strategic way to handle your debt issues. A drawn out bankruptcy can lead to high legal costs and the possible loss of assets. Debt restructuring will allow you to protect your assets while you work through your issues.
If you are facing complicated or deep-rooted debt issues, a business law attorney may be able to help you determine a viable solution. Contact an attorney today who may be able to help you or your company restore the financial security you desire.
Thanks to our friends and contributors from Smith & Weer, P.C. for their advice on debt solutions and bankruptcy.