Forums: Discussions for entrepreneurs and small business.

Hey all,
I hope some of you have some advice here for us.  A little background...we`re a small nationwide company that does a fair bit of business.  In order to start up, and get our initial amount of fabric, and garments sewn, we have a line of credit through a bank and two credit cards.  The interest on these is killing us.  Although we do bring in money in sales every month in sales, it all goes towards the interest and we`re basically giving away our inventory to pay that interest.  None of us wants to file bankruptcy (we`re an LLC, by the way) but we also don`t see a way of continuing right now.  Are there alternatives such as somehow getting a freeze on credit card interest/l.o.c. interest?  I`d rather get the initial loan amount paid off rather than not paying anything because of bankruptcy.  Any thoughts?  Thanks!

First, if you have income, you won`t get out of paying all or most of the debt in bankruptcy.  The first thing I would do is shred the credit cards.  Next, write a paper letter (snail mail) to the credit card companies and tell them that you are overextended because you used the CC for raw materials, startup stock, etc. You do want to pay the debt, but unless the CC company can negotiate a lower interest payout, bankruptcy may become involuntary.  Try the same thing with the bank.  They have enough bankruptcies on their books that any honest approach for you to stay out of bankruptcy would likely be met with some positive reply.

Or you could do what my Sister-in-law does (warning, she is on the thin line that separates normal from lunacy).  Every six months or so, she applies for a zero or low-interest teaser rate "balance transfer" loan to pay off the previous ZLI loan.  This will only work for so long as there is a smaller pool of credit card companies offering this kind of loan, and it hurts your credit rating to constantly be applying for credit.  It would, however, allow you to draw down the principal without the onerous credit card interest rates.  You do, however, have to be highly conceintous about not drawing any operating cash out of the process as this defeats the purpose.  And you have to amortize an aggressive paydown before your pyramid falls apart.




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Steve Mann
Internet Videographer
MannMade Digital Video
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Filing bankruptcy can be a scary outlook.  How to start and who will help?  What type of bankruptcy cases or filling is available? What will be the consequences of a bankruptcy filing?  You only get one shot, so it’s vital that you get it right the first time. This is why hiring the right bankruptcy attorney is crucial. Filling for bankruptcy is not easy, as you required proper information and guidance. You can get guidance from any Bankruptcy Lawyers

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Bankruptcy is the most sad thing for a certain business. But if you still in the point wherein you will choose either stop making business or still trying save your business .

The purpose of business is earning profit. But if you really think deep, making busines stop its transaction for a while would be a better option than losing everything.

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Bankruptcy always effect on leases, as landlords are there to seek details of automatic stay but generally bankruptcy courts don't grant to the property dealers very soon.

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Before you file bankruptcy, consider this fact.  Bankruptcy may affect your standing with current and future suppliers.  Many suppliers before they extend credit do a financial background check on new customers.  How would a bankruptcy look on your credit history if it were checked. 

Steve Mann had the right idea.  Try to negotiate a lower interest rate.

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The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.