Deflation: A debtors’ Worst Nightmare

Luckily we are no longer living in the 19th century.  In those days a debtor in default could be sent off to “debtors’ prison” when he/she finds themselves in a financial bind.  If this practice was still alive today we would be needing a lot more prisons for those of us in debt.

We are living in a more debtor friendly world yet being in debt could be considered comparable to being in prison.  We are living in a world of deflated revenues yet our debt service payments are identical to when we were living in the bubble years.  We have to work harder and harder to create enough revenue to cover overhead, we cut our own pay or even work without taking a paycheck to support our creditors.  We see little results, yet we keep going because we think “the economy is turning around,” or “I don’t want to make the mistake of bailing out only to see revenues pick up a few months later.”  We are being held captive by our creditors and this idea that business will come back again and we will once again enjoy the prosperity we had prior to 2008.

Next time you are trapped in this way of thinking take a second to examine your actions objectively.  Yes, you have an obligation to your creditors.  Yes, you must continue to produce revenue to support your family and employees that are depending on you.  Yes, you probably are emotionally dependent on fulfilling your financial obligations.  However, you must position yourself better so that you are working for yourself and not solely for your creditors.  Why should you and your employees take huge sacrifices in order to make you creditors whole?  Should they not take a part in the losses your business is enduring?

This is why a debt workout is essential in today’s tough economic environment.  There is really no other path forward other than to reduce the monthly outflow to creditors.  There is a way and we do it each and every day for our clients.  Creditors are welcome to a constructive alternative plan to default and liquidation of your business.  They do too much of it already, and if you can separate yourself from the other borrowers in default, they will welcome your proactive position and will be very willing to listen to your alternative plan.  We know what they want to hear, and would be more than willing to guide you down our path.  Give us a call.