BANKRUPTCY VS. DEBT RELIEF: WHICH IS RIGHT FOR YOUR BUSINESS?
If you’re overwhelmed by your business debt, you aren’t alone — in fact, according to the SBA, many small businesses face financial difficulties at some point, and need a lifeline.
But guess what?
Delancey Street can help you.
We’re a top tier business debt relief company, based in NYC, offering a money back guarantee for debt relief services. When you enroll in a business debt relief program, you’re creating a way to breathe, avoid going out of business, and regain control. That’s the ultimate goal. We give you the room you need to figure out how to fix your business, improve your margins, and grow it.
WHY THIS CHOICE MATTERS
Choosing between bankruptcy and a debt relief program can feel like standing at a crossroad. You might be dealing with merchant cash advance debt, business credit cards, or other forms of bad debt obligations. Regardless – we can help you. Our team focuses on all types of unsecured business debt, and we understand how crucial it is to make an informed decision. We give you the information you need to make the decision.
BANKRUPTCY EXPLAINED
Bankruptcy is a legal process authorized by federal law — specifically, Title 11 of the U.S. Code (https://www.uscourts.gov/services-forms/bankruptcy). It offers a potential reset, but it comes with complexities that have to be understood.
- Chapter 7: Often means liquidation of your business assets to pay creditors. It might wipe out much of your debt but could also put you out of business since you have no assets left to work with.
- Chapter 11: Known as “reorganization.” It lets you restructure your debt and potentially keep running the business. It’s typically more expensive and requires a feasible plan. It has to be approved by the judge.
Potential Penalties and Implications
Filing for bankruptcy can lead to a number of consequences that are bad for your business:
- Damage to your credit score, both personally and for your business. It really follows you for the ret of your life.
- Loss of certain assets if liquidation occurs. There is no way around this.
- Rigorous court oversight — lenders can challenge your filing.
From the lender’s perspective, bankruptcy halts their collection efforts for a while (the automatic stay), but it can also force them to line up with other creditors — something they’re not always thrilled about. That’s why lenders would rather work out a deal with you privately, rather than going to bankruptcy court.
BUSINESS DEBT RELIEF PROGRAMS
Another route is enrolling in a business debt relief program, like the one offered by Delancey Street. This involves debt negotiation, consolidation, or adjusting terms so you can actually manage your obligations. Regardless of whether you have stacked MCAs, maxed-out business credit cards, or other high-interest loans — we can help you out of the hole you’re in.
Here are some forms of debt relief you might consider:
- Merchant Cash Advance Consolidation: Instead of sinking under multiple MCAs, you consolidate into one manageable payment, with one factor rate.
- Debt Negotiation: We speak directly to your lenders, aiming to reduce your balances or interest rates.
- Invoice Factoring: Sell your unpaid invoices for instant cash flow (see https://www.sba.gov/funding-programs for government-backed factoring info and advice).
LEGAL RAMIFICATIONS & PENALTIES
Debt relief programs can be complicated. If you default on obligations or fail to negotiate your debt effectively, lenders (especially MCA lenders) will sue your business and you personally, garnish your revenue, or place liens on your business assets. Some lenders will even require a personal guarantee, meaning your personal property could be at stake.
The IRS (https://www.irs.gov) warns about potential tax implications too. For instance, forgiven debt might be considered taxable income. Understanding these pitfalls is crucial before you decide on any path. Many debt relief companies will fail to warn you about this.
HOW WE’D DEFEND YOU
Delancey Street is owned by an attorney, which means we have a sister-law firm that helps you if legal complications arise. Our approach centers on:
- Immediate Communication: We reach out to lenders and explain your situation at every turn. This alone can sometimes avert lawsuits.
- Strategic Negotiation: We focus on restructuring your obligations so your business can stay alive and keep operating.
- Shielding You from Lawsuits: If a lender sues, we will be your legal defense, and we will engage in negotiation tactics to minimize exposure.
In many cases, we can dismantle a lender’s claims if they’ve engaged in predatory practices, or if the contract terms violate local or state laws.
EVERY SITUATION IS DIFFERENT
Regardless of whether your business is a sole proprietorship or a major corporation, whether you owe $10,000 or $1 million, or whether you’re in default or just struggling — there’s a path forward to help you out of the pinch you’re in. The question is which one best fits your situation.
- Bankruptcy might be the right move if your debt is impossible to repay back or you can’t find a sustainable repayment plan.
- Business debt relief might be better if you believe your cash flow can recover, especially with strategic negotiation and better terms for your debt.
TALK TO OUR TEAM TODAY
At Delancey Street, we offer a FREE CONSULTATION so you can figure out what legal path is best for you — with no strings attached. We’re available 24/7, to provide a risk-free conversation about how to handle your business debt. Remember, we back our debt relief services with a money back guarantee because we believe in results.
You deserve to focus on growing your business, not battling lenders day after day.