When small-business owners in Florida are forced to close up shop but still have lots of credit card debt, they have three options that they can pursue: They can file for bankruptcy, reach a settlement of the debt or continue to pay it off no matter what it takes. Filing for bankruptcy many stay on the owner’s credit record for up to 10 years, but it is a viable option to consider.
A debt settlement is also a path that the business owner can take. This negotiation with the debt-holder to arrive at a lower amount might result in a lower total cash outlay by the owner, but the event may show up on a credit report for seven years after the original delinquency date. Enlisting the assistance of a debt settlement company can have its own costs and pitfalls as well.
The third option that the business owner can pursue is paying off the original amount of the debt. He or she may have to sell assets, rely on family members and make high monthly payments over the course of many years. In the end, the owner will be delaying a fresh financial start and may end up paying thousands of dollars in interest.
In tough economic times, small business owners can be left holding the bag of credit card debt. There is not necessarily an easy answer for these owners, and there are a number of courses of action for them to consider. An attorney who is knowledgeable in the law surrounding Chapter 7 filings may be able to provide guidance to business owners and let them know what their options are as they seek debt relief. A bankruptcy filing is a viable avenue for debt repayment and reestablishing one’s financial footing.
Source: Fox Business, “Repayment, Settlement, Bankruptcy: Facing Debt from Failed Business”, Elaine Pofeldt, August 07, 2013