Almost two years into the pandemic, the long-haul effects of the economic slowdown weigh heavily on many families, couples, and individuals in the country. Many of whom are facing large debt, the threat of eviction, the uncertainty of the future due to a job loss, and missed employment opportunities because of the pandemic.
This is because businesses — both big and small — are going through a tough economic situation as well, and some are closing shop as they’ve become insolvent; many companies are facing bankruptcy.
Ceasing to operate a business is one of the hardest decisions a business owner has to make. Aside from losing their own source of income, they are also losing the people they’ve worked with. In the end, both business owners and employees face the same situation as soon as their employment ends.
That said, here’s what business owners can do to overcome financial setbacks and recover from the economic impact of the pandemic.
File for Debt Relief
While none of us wants to hurt our credit score and affect our ability to get approved for a mortgage, being in debt and unable to pay any of it off will do more damage and even worse than filing for bankruptcy.
When filing for Chapter 7 Bankruptcy with your lawyer, you will be informed of the pros and cons of it. The good thing about Chapter 7 is it discharges most of your unsecured debt: credit card debt, income tax debt, personal loans, HOA fees, and medical bills to name a few.
However, filing a petition for relief under Chapter 7 does not exempt the debtor (the person filing for bankruptcy) from non-dischargeable debts. These include alimony, child support, and tax liens.
Filing for bankruptcy is as difficult a decision to make as closing a business. But by doing so, it allows you, the business owner, to prevent further losses, stop running away from creditors, and ultimately be able to start anew.
It may take a few years before you can get a mortgage, a loan, or obtain credit like before. But in exchange, you can have peace of mind and start with a clean slate. It may take some time to fully recover and become financially stable again, but the opportunity to reach that future state is there for you.
Re-start and Re-strategize
Having debt removed and starting with a clean slate will help you rebuild your financial integrity over time. This gives you the opportunity to put up a business and help create jobs within your local community in the future once you have the means to do it again.
But to reach that future state, small steps need to be taken in your current state. This includes coming up with a realistic and affordable monthly budget that is well within your means and paying existing regular bills on time. These actions will help rebuild credit health and allow you to regain your financial footing, slowly but surely.
Credit counseling is the best step to take if coming up with a budget is quite challenging for you. Counselors can help draw up a monthly budget that covers the necessities and provide helpful information on how you can maintain a budget month after month.
Having the proper recovery mindset and a realistic recovery plan is the bedrock of a healthier and more stable financial future. It promotes better spending habits and living within your means so that you can recover financially, soon as possible.
Earn More, Spend Less
To maintain financial independence, stability, and security, you must continue practicing discipline in your finances. Continue paying bills on time and living within your means. By doing so, you can remain debt-free and save more for your future.
Setting aside a portion of your income for savings gives you financial security and lets you make your money work for you through investments. This will provide you with the means to diversify your portfolio later, increase your earnings, regain wealth, and ultimately become financially independent once again.
Closing a business and filing for bankruptcy to find relief from debt is a huge decision to make. When you decide to go through this process, it’d be best that you do with an experienced bankruptcy lawyer who can help you and guide you every step of the way.
Remember, filing for bankruptcy may affect your credit. But staying in debt that you have no means to pay off will affect a greater aspect of your life. The road to recovery demands discipline and hard work, but each step will lead you to your financial freedom. It preserves your ability to start a business again in the future and earn a living from doing what you enjoy the most.