While trying to get yourself out of the trenches of financial failure, filing bankruptcy might feel like it’s the end of the world. Having to wind down a business that you have worked to build may feel like your career is over, even before it started. But, wait, there is a way you can get back on your feet and get your financial groove on.
Taking a step back, objectively evaluating your situation and making a plan of recovery will help you see that the situation is not as gloomy as you think. As it turns out, there is life after bankruptcy! In fact, many small businesses with less than 500 employees have filed for bankruptcy and rebound back into thriving ventures within seven years of filing for bankruptcy.
How did they do it? Financial trouble means that you can get back to running a profitable business selling security camera system for home, for example, working with vendors, applying for credit and obtaining business loans. Below are steps that can help you recover fast.
If your brush with bankruptcy also included personal bankruptcy, you need to pay attention to what this is likely to mean for your credit score – personally. Ensure that your bankruptcy is reflected in your credit reports through the three major credit-reporting houses – Experian, Equifax and TransUnion. It is not a thrill for personal bankruptcy to be included in a credit report, but this situation will not last forever.
When dealing with your credit reports, you had better choose accuracy over flattery. So deal with the problem directly and ensure that the report is not only accurate, but check in regularly with your creditors as you move ahead.
Negotiate Fresh Vendor Contracts
Within months of filing bankruptcy, it is much easier to get new contracts from your suppliers instead of banks. As long as you have been maintaining a working relationship with a few, they are more likely going to be there for you when you need them most. If you have to look at building new relationships, it is better to start with small vendors.
Be warned, the small business vendors will look into your personal or business credit history. However, if a fellow business owner see the past bankruptcy, he or she is more likely to empathize with you. This means a step to getting back on your financial feet.
Get Business Finance
One of the biggest obstacles you have to deal with as you get back from bankruptcy is obtaining new financing. The competitive lending market will be tighter, considering the negative credit history with bankruptcy thrown in the mix. If you are still willing to get new business financing, be ready to fork out higher interest rates, by 1 to 1.6 percent than you would have otherwise paid.
Getting financing is not an impossible task, as long as you know where to look. Consider getting other financing alternatives like peer-to-peer landing, short-loans, a secured credit card or an SBA backed microloan. The options may be costly, but they will help you get back on your feet.
Let the Past Be
Having a bankruptcy in your credit history is not a pleasant experience, but, again, it will not last forever. Bankruptcy stays on your credit for a maximum of 10 years, but personal bankruptcies clear within seven years. While the 7 to 10 years may seem like a million years away today, staying a step ahead as you rebuild your business will see the years pass quickly and creditors will not even care about what happened in the past.