Debt isn’t always a four-letter word. In many instances, debt is how small businesses get started, but when expenses are no longer going toward the business, things can quickly get out of control. If you’re currently struggling with managing your debt, there is a debt solution in Delray Beach: you can contact the Law Offices of John E. Mufson.
John Mufson has more than 25 years of experience in providing bankruptcy representation and debt relief services to individuals and small-business owners in Palm Beach County.
When debt becomes overwhelming, you can also apply the following strategies.
Evaluate Your Debt
When it feels like your debt is getting out of control, you can evaluate it by calculating your debt-to-income (DTI) ratio. This will help you determine if your debt payments really are getting the best of you. Your DTI should never exceed 36 percent, as this won’t give you a sufficient financial cushion to manage unforeseen expenses.
Create A New Budget
If your current budget isn’t working, it may be time to create a new one. After you have figured out your current cash flow and how much you owe in debt, your new budget should emphasize how much of your funds can go towards paying off your debt each month.
Pick A Debt Reduction Strategy
Another effective debt solution in Delray Beach is to pick a debt reduction strategy – and harness the willpower to stick with it and the new budget you’ve created. There are two common strategies you can choose from:
- Spartan strategy: Only spend money on the essentials until your debt is fully paid off.
- Percentage strategy: Set aside a percentage of your profit to pay off your debt.
Choosing which strategy to choose depends on your cash flow and the size of your debt. However, either strategy can work at helping you eliminate debt as long as you stay on track.
Minimize Spending
Once you know the exact amount of debt your small business has accrued, you can begin cutting back on unnecessary costs.
- Are there expenses that can be negotiated down to a lower price?
- Are there services your business is no longer using?
- Are you paying wholesale for as many products as possible?
- Are too many staff members working during slow hours?
- What are your biggest expenses and, if possible, how can they be reduced or eliminated?
- Is your company spending too much on non-essentials?
This is an effective debt solution in Delray Beach for small businesses for several reasons. First, it gives you an accurate look at your business expenses. You may be surprised at how much money your business is funneling into unessential goods and services. Then, once you begin cutting back on costs, you will significantly lower your DTI.
Increase Business Revenue
The best way to improve your cash flow is by generating more business. You can do this by improving your marketing strategies to get your business in front of more potential customers. Marketing is important, but even more important is good customer service. Make sure every interaction your customers have with your business is a positive one. This will better guarantee repeats and word of mouth. Additionally, you can reassess your current prices and consider raising products or services to increase revenue.
Consider Bankruptcy
If your debt is too great to overcome, a final debt solution in Delray Beach is considering bankruptcy. This is the fastest way small businesses can find their way out of insurmountable debt. Debt settlement is also an option, but if your business can’t afford the reduced payments offered by collectors, filing for bankruptcy is the best option. You don’t have to file Chapter 11, as it’s possible to reduce or completely discharge debts by filing a Chapter 13 or Chapter 7 consumer bankruptcy. It’s also a less complicated and costly route. Filing for bankruptcy may be the best solution to offer the relief you need.
Contact the Law Offices of John E. Mufson
If you are considering bankruptcy, you will need to contact a bankruptcy lawyer in Delray Beach. Our law firm has several years of experience helping small-business owners in South Florida find debt relief. We can create a solution designed to reduce your debts to the greatest degree and help you keep as many assets as possible. Contact us today or call 561.272.1003 for a free consultation.