Debt counseling

Debt counseling – What can I do if I am in debt? Also for entrepreneurs

Who offers help with debts?

Various advice centers offer their support to indebted or bankrupt citizens. State or voluntary debt counseling services make their services available to the public and are, therefore, usually free of charge as these are financed by the state. Particularly noteworthy are charitable organizations.

Process of debt counseling 

After your debt advisor has obtained an overview of your financial situation and your debt situation based on your documents, a specific debt settlement plan will be drawn up. They will also get in touch with your creditors and try to negotiate with them.

Will debt counseling also help me with bankruptcy proceedings?

One of the tasks of debt counseling is to support you in the preparation and implementation of bankruptcy proceedings. If your debt adviser cannot reach an agreement with your creditors, bankruptcy is usually the last resort out of the debt situation. In the following cases, one may bankruptcy proceedings are initiated:

  • Bankruptcy
  • Impending bankruptcy

If bankruptcy is inevitable, in many cases it is advisable to seek support from a debt counseling service from Attorney Debt Fighters – bankruptcy attorney, specializing in accompanying bankruptcy proceedings. Attorney Debt Fighters offers not only classic debt counseling, but also targeted advice for private individuals who want to eliminate their debts by means of bankruptcy proceedings.

Preparation for the first appointment for debt counseling 

A point applies to any debt advice in the US: You can only help them if you are actively involved in the debt and be well prepared for each appointment. Only then can the respective employee find a solution with you to settle the debt. 

  • Please create a complete budget overview with all income and expenses.
  • Bring all proof of income to the appointment, e.g., salary slips, approval notices for unemployment benefits. 
  • Make a list of all creditors.
  • It is best to sort all documents in a file folder, ideally sorted according to the individual creditors.

Corporate debt is not uncommon

One in ten companies in Germany, according to the credit agency Credit reform debt to a greater extent. Many American companies are in such a precarious position that they need more than eleven years to have the debt repaid. Every third company can, however, completely free itself of debts after a period of a maximum of three years if the economic situation remains constant.

The reasons for a company’s indebtedness can be many:

  • Uncontrolled business expansion
  • Change in the overall economic situation
  • Financing error
  • Wrong investment decisions
  • Incorrect production planning
  • Bad debts from customers

If you are an entrepreneur and can no longer meet payment obligations because the income can no longer cover the expenses, you should act. A first step can be to contact a debt counseling service for entrepreneurs.

Also see: Different kinds of bankruptcy

Debt counseling for entrepreneurs: does it exist and is it free?

Most debt counseling centers are designed to only help private individuals with financial difficulties. Only a few tailor their advisory services to companies. In addition to knowledge in the area of ​​debt repayment and insolvency law, debt counseling for entrepreneurs must also have business and commercial know-how.

Small business owners in particular do not know what to do if they have debts without a management consultant or legal counsel. If a company gets into debt, this has consequences not only for the management, but also for all employees who may no longer receive a salary. Debt counseling for entrepreneurs pursues these goals:

  • Preservation of the company
  • Avoidance of corporate bankruptcy
  • Business continuity during bankruptcy

Public debt counseling centers are financed by the state and are, therefore, free of charge for private individuals. For entrepreneurs, however, debt advice is usually associated with costs. However, some non-profit associations also make their advisory services available to entrepreneurs. It is best to ask the relevant offices in your city whether they also offer free debt advice for entrepreneurs.

Debt trap

In the debt trap? Debt counseling gives valuable tips

To a certain extent, debt is not a problem. The term “debt”, which is often used in this context, only means that there is a certain outstanding payment obligation, regardless of how high this amount is and whether the debtor can pay it.

It becomes problematic, however, when a debtor slips into insolvency or over-indebtedness. Then he is no longer able to pay outstanding bills. If he is over-indebted, the existing liabilities, e.g. B. a loan, higher than the income. Anyone who gets into such a situation should self-critically assess whether they cannot meet their payment obligations for just this one month or whether the problem is deeper. In the event of an extraordinary event, it may be advisable to speak to the believer.

If you are repeatedly unable to pay off your debts, contact a debt counseling service immediately. This gives tips on how you can behave and works out a way out of the debt trap with you.

When is corporate bankruptcy threatened?

If the out-of-court debt settlement procedure fails or if the creditors do not agree to a compromise, the only remaining company is usually bankrupt. This can then be registered if one of the following three reasons for opening applies:

  • Existing insolvency
  • Impending insolvency
  • Over-indebtedness

A company is insolvent when it is no longer able to meet its payment obligations. A company is over-indebted if the existing payment obligations are no longer covered by the assets. Debt counseling for entrepreneurs can explain the prerequisites, process and goals of corporate insolvency.

The most important thing about debt counseling for entrepreneurs

Is there free debt counseling for companies?

As a rule, the free offers from debt counseling centers are aimed at consumers. This service is usually not intended for insolvent companies.

Who offers (free) debt advice for entrepreneurs?

Some non-profit associations also advise entrepreneurs in financial need. It is best to ask the relevant offices in your city whether they also   offer free debt advice for entrepreneurs.

What alternatives to debt counseling are there for companies?

Companies can get support from a lawyer or a management consultancy for a fee. Tax advisors can also help out from time to time.