The appropriate ‘mindset’ for a workout

First of all, please understand, you are the first one that knows you are in trouble when you fail to pay the 941 tax, or default on an SBA loan, or a mortgage, or any other secured or unsecured line of credit.

This is important as you have an opportunity to begin to prepare for the inevitable the moment these events occur long before you are in jeopardy.

What is the inevitable? The  collection process, including possible business asset liquidation, developing into personal liability, and possible personal asset liquidation (the home). This is all very bad. There is nothing good about such a scenario and thus many, far too many, people practice avoidance tactics, refusing to recognize they are in harms way, rather then preparing for what will surely come.

The next worst approach is to treat these issues as if they were normal creditor issues, nothing to be too concerned about and a problem that can be taken care of in the natural and due course of business. This is very typical and is another huge error.

Let me say it loud and clear: THERE IS NOTHING BUSINESS LIKE ABOUT A SECURED PARTY, OR THE IRS, OR SBA, COLLECTING IN A DEFAULTED SITUATION. The IRS possesses extreme power and can penetrate walls, jump over tall buildings and act as fast as a speeding bullet, if they are motivated. You cannot hide, run or negotiate with them in a meaningful way. Nothing works except the statutory guidelines which are designed to give them the ultimate position in collecting successfully against you.They will not help you through this, it is up to you to understand your rights and exercise them diligently.

They will not follow normal business strategies. They are not overly concerned with maximizing their return, they are more interested in  resolving the file and moving onto the next one, and shutting you down is a fine option. Yes, it makes little sense but that is what we are up against, a very powerful agency which is focused on finality not reasonable negotiation.

STOP EXPECTING A REASONABLE WORKOUT OVER TIME, ALLOWING YOU TO CATCH UP AT YOUR OWN PACE.

The moment you fail to pay your first payment to the IRS you need to understand that unless you address this intelligently it is just a matter of time until they put you out of business and liquidate your assets. Unfortunately intelligently does not mean in the normal course of business using understood business strategies and techniques, not so, this is dangerous, hostile, alien ground and the old rules of business no longer work.

As for the SBA, please keep in mind that the bank is charged with the responsibility of exhausting their remedies to collect whats being guaranteed by the SBA. They must collect as best and as fast as they can to receive their guaranty, exhausting all their legal remedies first, so try talking sense to them…its a problem.

Banks, vendors, credit cards, etc, begin to approach more normal business scenarios however the collection process is designed to satisfy their needs not yours. If you fight them in the legal arena you will lose as the law is designed to support  the lender not the borrower.

So here is the point. When you begin to breach your commitments you need a workout plan not a typical business strategy. Then words used to describe a borrower in such situations is   under water, upside down, and other such descriptions, because that is what you are…upside down and under water… yet so few borrowers in such situations truly understand the danger they are in and tend to deal with it in the ordinary course of business as if it is just one more problem on the to do list for the day or week.

That’s the disease we must resist, allowing these issues to simply become one more problem to work out. In reality it is THE problem, the only problem that must be resolved if you are to emerge and remain in business. If your core business is not worthy of saving or cannot sustain the demands that will be made against it for repayment then a safe exit plan is just as crucial and this too does not fall along normal business concepts but is also upside down thinking as it must be to deal with your upside down issues.

When these events occur, resist the temptation to continue doing business as usual while waiting for something to happen. This will not work. It is not business as usual. The sooner you get this and begin planning your workout or shut down the better you will survive what is surely coming.

The best advice of all is to get professional workout assistance as soon as you begin to default. It is hostile, allien ground that you will be forced to crawl over and a guide is most helpful.

Call me if you want to talk about this… 413-549-2966 Norm will set up a teleconference with me.