Many businesses must ask: “Is it better to file bankruptcy or debt settlement?”, and the answer depends on your operation; DebtSettlement.co points out, with debt settlement, you’ll have to: “Set aside fund during debt settlement negotiation to pay creditors once your debt settlement company negotiates a lower balance.”
This can be better than bankruptcy, as going bankrupt damages your credit score for a full decade after it hits. But it can also be worse. The big defining factor is going to be how much the business is worth. Consider a situation where you’re working with multiple enterprises.
Some Scenarios To Consider
Sometimes one business is doing well. Sometimes three out of four of your businesses are doing great, and it’s just that fourth one that’s lagging behind. No matter what you do, it just doesn’t seem to be working for you. Well, then filing bankruptcy may be recommendable.
If you’ve got strong businesses, cutting out the weak link could actually be profitable to you. The other businesses continue moving forward and you don’t have to worry about additional loans for a while, and going bankrupt on the one that didn’t work allowed you to keep from absorbing a loss.
If you’re dealing with the struggle of a single business, however, in many cases debt settlement will be what is recommended. In that scenario, you’re not going to have nearly so bad a credit hit, and you can usually extend payments out a few years, allowing you to get your feet back under you and begin a more profitable exploit down the line.
Unconventional Means Of Settlement
You may also be able to source some support from surprising quarters going the debt settlement route. Bankruptcy has a more permanent quality to it, but with debt settlement, you may just be able to put your business “on hold”, as it were, until you get things back as they should be.
To that end, sometimes you can use options like crowdfunding in order to overcome substantial losses. If you’ve got products or services that have a dear enough place in your local community, then it’s possible you’ve got a built-in following who would be willing to throw a few bucks your way en masse and help you reach a debt goal.
Facing The Music
That said, sometimes you’ve got to face either debt consolidation or bankruptcy in a non-business sense. Sometimes you’re looking at things on a personal level. In such scenarios, going the debt consolidation route is usually a better choice than bankruptcy, as having poor personal credit really does limit your options.
Something to avoid as much as possible is using one line of credit to pay off another. There are those who contend such a thing as “good debt” exists. Well, that is certainly debatable—but good debt or bad debt, you don’t want to put yourself deeper into the hole trying to pay off an earlier debt!
This is most often seen in the habits of those who don’t know how to manage lines of credit. They’ll use one credit card to pay off another credit card. You can only do that so long before you run out of credit cards. Then you’ve got a mountain of debt that forces you to either go bankrupt or consolidate, and either choice is undesirable.
The best advice is to avoid debt altogether, but that’s one of those things that are easier said than done. If you do find yourself fighting off the debt monkeys, though, don’t be afraid! You’re not alone, and there are recovery options out there.