Your business is faced with overwhelming debt and payments have not been made in months. Creditors are calling 債務重組 you on a regular basis demanding their money. Does this sound familiar? For some companies, business debt restructuring may be an option to consider to avoid bankruptcy.
Some business owners have may want to contact each creditor directly for a resolution, while others prefer to use a professional business settlement firm to handle the negotiation process. Reputable firms have proper legal forms, experience and the know how to complete a successful business debt settlement. Some firms may have large amounts of negotiated debt they submit to creditors and can pass on the high volume discounts to clients.
Always check to see if the debt restructuring company has a high number of complaints reported to the Better business bureau. You may also want to do further research on the company by using internet search engines. Another important point to consider before obtaining a debt settlement is the possibility of taxable income, due to a reduction of debt owed. The American Recovery and Reinvestment Act of 2009 may offer temporary relief. But as always, please consult with a tax advisor and/or legal advisor for your particular situation. Advantages and disadvantages of Debt Restructuring
Debt restructuring is used by businesses as an attempt for recovery from high debts. This useful tool adjusts the way payments are made on debts. Restructuring the debts may also include adjusting interest rates and changing the length of grace periods. People choose to have their businesses go through this process if they have become unable to stay on top of their financial situation. It is different from bankruptcy in that it is less expensive and will not take as heavy of a loss of reputation. It also increases the chances the business will succeed once they get back on their feet. Companies that end up filing for Chapter 7 bankruptcy only have a 20% chance of succeeding in the years to follow.
Restructuring debts will mean modifying bill payments. This can involve lowering monthly payments, lowering interest rates, and elongating grace periods. Creditors want to collect their money and therefore are usually open to adjusting the terms of loans so that they can continue to receive payments.
This form of debt repayment is not an option for all businesses. If a business risks debt restructuring and continues to fail, their only option may be bankruptcy. If the business had originally made the choice to file for bankruptcy, they may have already been on the path to recovery at this time. Because of the cloudy middle ground between choosing restructuring debts and filing for bankruptcy, people will seek the advice of an experienced bankruptcy attorney. The attorneys can investigate financial records and help decide if their debts can be negotiated to an affordable payment. On the 23rd of July 2009, Bank Negara Malaysia announced the operations commencement of the Corporate Debt Restructuring Committee (CDRC) in Malaysia, allowing corporate borrowers and creditors to work out debt resolutions without having the need to officiate legal proceedings. According to CDRC, this voluntary forum for large corporations who want to negotiate obligations their distressed debts can do so in the forum – And they’ve succeeded in assisting 57 companies and RM45. 8 billion in total outstanding debts.
The debt restructuring process will consist of reorganizing the financially distressed company’s outstanding obligations to reduce financial burden (by debts). This could mean decreasing rates paid and giving more time for the company to pay back. At times, some of these debts may be revoked by its creditors in exchange for an equity position in the company.
Usually, when this financially distressed company poses a high risk of going into bankruptcy, it can negotiate with its creditors to reduce these burdens and avoid going bankrupt. Legally, it’s possible for such a company to acquire protection from creditors, with hopes of renegotiating the terms on the debt agreement – Which is also termed as an Amended PN17 company in Malaysia. Managing your debt well and getting your financial life on track will actually raise your credit score. But it takes time to get back to better scores and get lower interest rates. You need to have patience RE-ESTABLISH your credit step by step.
The debt managing company helps in restructuring the debt by negotiating lower finance charges, interest rates and get financial penalties removed. A debt managing program is the final chance to redeem your credit. Make sure to be faithful and stick to the deadlines with the debt managers. Once you join such a program you will be required to close all your credit card accounts so that you do not start to run up more debt.