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Ways of handling small business debt


Business owners in Bradley County, Tennessee, may not be able to quite identify with the news stories announcing the latest large commercial bankruptcy, especially if the business is nationwide and worth millions of dollars. Even if these owners are themselves in financial distress due to business debt, filing a Chapter 11 bankruptcy, which large businesses use, may seem a little out of reach or like overkill.

On the other hand, these owners may not want to take the route of filing a Chapter 7, or "traditional bankrupty," either, since for a business, that is a signal that the creditors of the business have leave to swoop in and take what is left of the business's assets. Effectively, a Chapter 7 is acknowledging the business has failed.

Sometimes, the owner of a business may be able to work out a debt repayment plan on their own, provided of course that the business's creditors have the willingness to be patient with the owner. Some of these strategies include paying off debts with lower balances first while keeping up on minimum payments for the other debts. After that, an owner can use what was the payment on the lower balance to attack the other debts.

An alternative to this method is to pay down the loan with the highest interest rate first and then proceed from there.

Finally, some business owners may be able to avail themselves of a Chapter 13 bankruptcy, depending on their circumstances. The Chapter 13 would allow an eligible business owner to have a manageable payment plan to pay down debts while continuing to operate his or her business.

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