Solving Debt: The Steps which can Save you From Personal Bankruptcy
Debt is a predominant, global and systemic problem in today’s world. When dealing with clients from North America to the Middle East, debt is the one matter that is causing the most stress, ill health and financial strain on a large number of individuals and business people. It is almost as if the middle class cannot maintain a living without taking on debt to some degree. At the most basic level, almost everyone takes on some form of debt through credit cards. When finances become tight, as they may do so in a global recession or economic crunch, sometimes we can’t meet our debt obligations. This can trigger a chain reaction of legal collections, court cases, and for those who are unlucky, bankruptcy and the garnishing of assets (seizure of bank accounts, property and etc. to pay off debt).
However, there is a middle way, between defaulting on debt and going to court, which is often less travelled by individuals and small businesses. It is utilized by big banks, corporations, governments and financial institutions, to keep high cash flows moving. The general public usually remain in the dark about these legal strategies, which can be used to mitigate the fallout from debt default.
Debt Restructuring
At the intermediate stage, before your case goes to court, you can attempt to consolidate all of your debt into a structured payment plan or agreement. This involves approaching each creditor, individually or collectively (through an appointed attorney) and trying to organize a payment plan. This sounds simple enough, however, there is often a stumbling block if the creditor is not sympathetic to your situation. Many creditors may not agree to a payment plan outright, and will be willing to take their chance in seizing your personal assets through the court.
Another way to convince creditors, is to make a full or partial disclosure of assets, including salary, job earnings or other business income. If you are a business owner, you can assign yourself a salary in the total income and assets you hold in this disclosure document. Thereafter, you can assign the creditor a percentage of the income/assets from your business and operations, until the debt is paid. This will reduce your financial burdens until the debt is paid off, as you will establish a fixed salary or income for yourself before paying your creditors, ensuring your physical survival. In addition, it may dissuade a creditor from taking legal action, as once your income, asset holding and ability to pay is disclosed, they can undertake a full cost benefit analysis of the legal process, and will probably conclude that your deal is more profitable.
How to Make Debt Restructuring Work for You
It is important that any debt restructuring you undertake is managed in an organized and thoroughly documented manner. At the end of the process, you should have a clear agreement between your creditors and yourself, specifying the debt, how it is to be paid off, any installment plan, and any security interests or percentages attached to your assets under the agreement. In return for these concessions, your creditor must also clearly and unequivocally agree not to take any legal action against you, unless you default on the restructuring agreement.
It is obviously important to have professional help when you can. A penny of prevention is worth a pound of cure, and therefore taking a financial hit when hiring an attorney, or even an accountant, to help get your books and records in order, could save you a severe debt migraine in the long run. A clever lawyer or accountant will stipulate a basic income for yourself and your family in any resettlement deal, so that you can ensure your survival, while paying off your debt more comfortably.
In fact, lawyers and accountants have been notorious in not only allowing banks and failing government institutions to restructure debt without laying off staff, but to create conditions in which these failing organizations are still able to lavishly pay off their top executives despite the debt crisis.
Free Debt Consultation for Struggling Businesses and Individuals
For anyone who may be struggling with debt, we can offer a free advisory consultation. We know what the strain of debt can do to your health and family. Therefore, get in touch with us today if you want to get some help.
We won’t charge for our consultation, so the onus is on you to do something about your situation in an honest and earnest fashion!
email us at info@borderlesscounsel.com for some confidential help!