Businesses Plagued by Bad Solutions to Debt Problems

People in debt have always been prime targets for con artists who promise them easily solutions to their debt problems. But consumers aren’t the only targets. A new generation of sharks has targeted the business debtor and the average bankruptcy lawyer in New York has many stories about clients who have fallen for these games.

Consolidation Debt May Make the Problem Worse

Often before seeking the advice of a bankruptcy lawyer, business owners will try to resolve the debt by refinancing it at a lower rate. On the surface this is a reasonable solution but if done without the advice of an experienced accountant, it could make the problem worse. Sharp loan officers may talk companies into loans they don’t really need.

Consolidating short-term debt under long-term loans means more money paid out by the borrower. Although monthly payments might be lower, the interest will be paid over a longer term so will reach a greater total. This might be a valid option to get a business through a low revenue period as long as the borrower increases payments as profits rise. An option like this should be part of a larger financial strategy. (more…)