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Common Forms of Business Debt

Law Office of Ronald V. De Caprio Dec. 29, 2016

It takes a lot for a Rockland resident to keep the doors of their small business open. From paying for utilities and rent for the physical structure of the business entity to paying the employees and stocking necessary inventory, it can seem as though all of the cash flow is out of the business instead of into it. When a business finds that it is hemorrhaging funds and unable to pay its bills, it can be important for the business owner to step back and assess where the business is losing all of its financial ground.

In some cases, a business may simply not generate enough revenue to cover its overhead costs. Overhead costs are those fixed costs like rent, utilities, and wages that are constant and expected each and every month. If overhead costs are the reason that the business is struggling, then it may be possible for a business to salvage itself by finding more cost-effective options for operating.

For other businesses, it may not be overhead costs that cause problems but rather unexpected costs that cause financial strain. An accident or incident that depletes a business of funds can land a corporate entity in hot financial water. Some businesses get into trouble when they take out loans that they do not have the capacity to pay off, which leads to collection calls from angry creditors.

Finally, a business may get itself into trouble if its owner fails to keep the business’s assets separate from their own personal financial portfolio. When business and personal debts are co-mingled, it can be difficult for business owners to protect their personal assets from the collection efforts of business lenders.

Business expenses and debt can quickly add up and lead to overdue bills and financial obligations. While some businesses can ride out the ebb and flow of money into and out of their coffers, others struggle to stay afloat when costs exceed income. There are many options that businesses can use when they are struggling with overdue bills and bankruptcy attorneys can discuss with them options that may serve their entities’ needs.