I still remember that day when Mr. Smith told me about the ill effects of bankruptcy when we were discussing the bankruptcy of a big company. I realized that if as a big company they could not avoid bankruptcy, what will happen to small players like who runs a small departmental store. That is when I decided that I will take my business out of all debts so that the demon of bankruptcy does not gulp my business down.
List down all debts
The first thing that I did was I made a list of all my creditors and chalked out how much they owe me as on that date. Post I did a sum of all the amounts and arrived at the total outstanding that I had to give out, I calculated my current funds. I made a simple division of the funds available and took a target date to clear off the major debts.
Clear them off
Once the target date was decided I knew come what I may have to clear off those debts as I wanted to avoid bankruptcy or any similar situation like that. I cut down on my expenses drastically and gave over the usage of luxury items without which I could still continue. That it how I managed to clear off all the debts as well as the cloud of bankruptcy from my business.
My name is Miranda and I have to share a short tale from my life wherein I will tell about when I faced a huge financial crunch in my business what I did to avoid bankruptcy. I followed some simple and basic things during my bad times that helped me not only to avoid the tag of going bankrupt but also helped me come out of my poor financial state.
Fund raising programs are a great help
I sold some of the assets that were of no use for me and I could still live on without them. A garage sale over the weekend helped me clear off my old furniture and then a small fund raising program on the classified websites where I sold off old electronics, some outdated jewelry and some of the common household stuffs. This small fund raising program helped a lot as it not only raised some good fund for me, but at the same time informed my friends and family members that I am broke. Thankfully some of my family members helped me avoid bankruptcy by giving out some hard cash to me free of interest.
Sought cooperation from the creditors only
I had a clear discussion with my creditors which included even the banks. I had put my financial condition on the table in front of them and requested for a subsidy in the rate of interest and the monthly installments. My motto was to make it clear in front of them that if they do not help me avoid bankruptcy, they will not get even a single penny from my side later on. By God’s grace I encountered a few helpful and compassionate bank workers who understood my situation and put my case under their hardship programs which was meant for people like me who are on the verge of bankruptcy.
Filing bankruptcy should be the last resort for anyone. There is a reason why I say this. There was a time when I thought that declaring bankruptcy and then putting off some assets for sale was an easy way for businesses to wind up, but after watching Tim suffer so much I have changed my opinion and have started thinking that come what may, one should do all possible things to avoid bankruptcy.
It hits your personal life
Tim, my classmate went through a complete psychological breakdown when he went bankrupt due to a few wrong measures in his business. He fell for more alcohol to come out of the stress, but that only helped in ruining his personal life more.
It hits your professional reputation
When Tim tried to approach money lending companies, they treated him like an outcast as his credit scores had gone for a toss. Without money and without any hope to get money, Tim was completely shattered and he had no clue of how to come out of that situation.
To worsen the situation for my poor friend, the creditors sued him and to avoid going behind the bars he had to appoint attorneys who would fight the case for him. Finally Tim did come out of this situation with financial support from me and some other friends, but he and all of us learnt the hard lesson that it is better to avoid bankruptcy than to take all the pain that it brings upon your life.
Who would tell me about finance and money saving tips to avoid bankruptcy, when I am all set to crack the best position for the most successful business owner of the year in my area! Well, no one would even talked to me about crises and crunches, and even I never bothered to ask anyone about these things, because never did I feel the requirement.
However, time never goes smooth with a person always, and my business, the enviously successful of all in the whole area, also saw problems after a few people in my business joined hands with my rivals secretly in greed of more money. Ultimately it was me who suffered, as the business suddenly started going down.
My business strategies
I never used my direct funds for projects and expenses, and used loans from banks to meet these kinds of expenses. That’s why I had a lot of loans running, whose installments I always paid on time. But when the business started seeing bad and cold days, my hands were running out of money swiftly with the salary of my staffs, business running costs, and growing expenses. Adding my debts to that made me crazy when I found out that I had limited funds, and if I do not declare a bankruptcy now, then I will have to think of begging after a few days.
How I got bankruptcy help
It was at this time, when I got real help from a banker, who gave valuable bankruptcy help advices. He told me that bankruptcy declaration would no where help me, if I need to continue with this business in future. All businesses see tough times at some point of time, and this will pass by. But if I once get marked as the bankrupt business person, I would have to struggle to death to get the reputation back, and get loans and debt help for the development of business in future. With this he informed me about the several organizations which extend hands for bankruptcy help to people who have no other options left.
While doing a business I have always been very keen on keeping a check on my expenses as I had learnt a tough lesson looking at my friend John who just with his flamboyant methods could not avoid bankruptcy and his entire career was doomed.
The first reason to avoid
The first reason why one should avoid declaring the bankruptcy is that once you declare yourself to be a bankrupt, you are closing all doors for yourself to get a financial loan in the future. John had to wait for around 8 to 10 years to get his credit report cleared off from the stain of being bankrupted before he finally got a loan for his new venture.
It impacts you psychologically
I had seen John going through a real traumatic phase of his life when he was trying to avoid bankruptcy but failed to do so. Running after lawyers who would defend his case against the creditors is in itself was a very tiring and frustrating task, leave aside the money that he had to pay them which had dug big holes in my poor friend’s pocket. To worsen the matter, John’s relationship with his wife Kate went through troubled waters as John was not able to provide enough funding to the family to run healthily. All in all, John was in a very poor psychological state of mind due to the bankruptcy.
From John I have learnt that come what may, bankruptcy should be the last option for anyone. It lets you down in your own eyes as I had seen John so frustrated that he could not stand in front of the mirror even. It is much better to have a structured accounting system in your business and clear off your debts well within tie, before they grow enough to engulf your whole business. I have been clearing them off as I do not want to go to a stage where I have to take measures to avoid bankruptcy.
I have been running a small business for some time now which unfortunately was not making much profit off late. The condition was so bad that I had to make backup plans to avoid bankruptcy as debts and list of creditors were growing day by day. Not sure what to do I decided on doing something very strategic.
Extra funds arranged
I was realizing that without extra funds I would not be able to run the business and gradually I would have to declare bankruptcy. So to avoid bankruptcy I decided on selling off some household stuff that I wasn’t using. The motto was to raise as much fund for the business as possible.
Consolidated all segregated loans
Along with raising funds, I made a list of all the creditors who owe money from me. As the amounts were divided I had to pay interest to everybody and that was draining out a lot of money. I took one big loan at a nominal rate of interest and cleared off all other debts and dues. So now I had to worry about only one loan repayment which made my job much easier.
With the funds raised by selling off old items I advertised about my business and started getting more customers at my shop. Finally in a year’s time, I could not only come out of the threat of bankruptcy, but also started making profits from my business.