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Keeping Your Shirt From Creditors

Don't let debt take over your dream.

When you first started your business, you were driven by visions of making the big bucks. You didn't mind draining your savings, running up your credit cards and cashing in your 401(k). After all, you were pursuing a dream that got you psyched to start each day.

But now this "dream" freaks you out. The revenue or financing is slow coming in, and your credit is maxed. Your cell phone has been cut off as other past-due bills pile up. The day-to-day financial stress is eating away at your will to keep your business going.

If this sounds like you, there's hope. I've experienced this twice in my entrepreneurial career. The first time was shortly after I left a high school teaching job to launch my writing business; the second was several months after starting a dotcom. In both cases, I've pulled through, keeping my house, family and dream intact.

If, deep down, you desire to be your own boss but are consumed with worry about creditors, you can do something about it! Here are five tips to help you handle your creditors with integrity-and keep your shirt.

1. Don't freak out. If you allow yourself to think "doom" thoughts, you'll inevitably create a doomsday scenario for yourself. Instead, change the way you perceive your situation. When you feel yourself about to have a panic attack, stop! Then ask yourself some questions:

  • What can I learn from all this? Perhaps this is preparing me to become a stronger leader with the ability to handle high-pressure situations. Perhaps I can be more efficient in my spending and find creative ways to cut expenses, which will serve me well when I turn things around.
  • Whom can I talk to about this? Who are the successful entrepreneurs I know? Surely they've experienced cash-flow problems in their careers. How did they handle the pressure from creditors?
  • What are some solutions for improving my cash flow? Should I change my pricing to generate more sales? Do I need to improve my "elevator pitch" so investors will grasp my idea more readily? Am I pursuing repeat business from current customers as effectively as I should be? Should I create new revenue streams? By asking yourself such questions, you break the negative cycle and move yourself toward solutions that can keep you in business.

2. Just face it!The thought of your debts may make you squeamish, but you'll need to get over that. Know exactly how much you owe and to whom. Schedule a two- to three-hour session to gather all your past-due bills and credit card statements. Add them up. Write down the interest rates you're paying for each credit card. The idea here is to get a true assessment of where you stand today so you can take practical steps to solve your problem.

3. Project when you can pay up. Look at your cash flow. When can you make at least partial payments on your bills? Can you scale down your need for a product or service 'til you have the cash flow to handle it? By designing a workable plan to pay down your debts, even on a small scale, you'll begin to feel more in control of your situation.

4. Call them before they call you. What's holding you back from calling your creditors? It's probably the feeling of embarrassment, depression, frustration or all of the above. When you feel this way, understand that your creditors, for the most part, want to help you succeed in paying them. Most will accept partial payments as long as you continue to communicate with them.

5. Follow through. Once you've told a creditor what you're going to do, do it! What happens if, for some reason, you can't make the deadline you proposed? Call before your due date and try to pay at least something. When you're upfront with creditors and follow through on your word, you'll build credibility with them and demonstrate that you're a person of integrity. And you keep your dream alive.

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  • CardTrak helps you find the credit cards with the lowest interest rates, an option for transferring your balances from high-rate cards.
  • The National Foundation for Credit Counseling provides resources and credit counseling contacts to help you negotiate with people you owe and put together a plan to repay your debt.
Learn More
  • If you're dealing with past credit problems you thought were long gone, read Get Rid of Debt.
  • Considering bankruptcy? Consider this first.

Sean M. Lyden is the principal and senior writer of The Professional Writing Firm Inc., a Kennesaw, Georgia, company that specializes in ghostwriting articles. Lyden writes frequently on motivation, management and marketing issues.

Sean Lyden is the CEO of Prestige Positioning (a service of The Professional Writing Firm Inc.), an Atlanta-based firm that "positions" clients as leading experts in their field-through ghost-written articles and books for publication. Clients include Morgan Stanley, IFG Securities, SunTrust Service Corp. and several professional advisory and management consulting firms nationwide.

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