Eugene J. Cunningham, Esq
Attorney
28 Clinton St. Ste 6
Saratoga Springs, NY 12866
http://www.tikinc.com/ny
gcunningham@tikinc.com
Bankruptcy law provides a way for an individual or business to obtain freedom or "relief" from debts which can no longer be paid and which interfere with the debtor's ability to survive. Until someone runs into trouble, they do not appreciate the fragility of existence in our credit-based culture.
................Cash Flow and Time Are Business Matters, Not Moral Ones
When a person or company has too much debt, that debtor will stop doing normal things which earn an income; instead, the entire existence of the debtor becomes focused upon creating enough "cash-flow" to pay just enough of their debts to stay in their home or business location, to keep the lights on, to pay insurance and so on. This debtor is in a "cash flow" crisis.
How a business or person handles a cash flow crisis depends on the problem and to a large extent the psychology of the owners or debtor. Anyone in a cash flow crisis has to pay attention to HOW they are reacting to the problem. Self awareness is critical. Often times, you need an outsider to bring objectivity and to relieve the stress building in the debtor.
For my own part, I once sought out the advice of a consultant regarding a business with a cash flow crisis that would last for three months. He looked over our numbers and laughed. "You are taking this too personal. Call your vendors and tell them they have to wait two months." That simple advice worked.
Nearly all business creditors and normal humans understand that businesses and individuals have economic cycles and that as long as the debtor is still alive and in communication, they will back off for a long time. In fact, most businesses build into their budgets the need to carry debt upon occasion.
Bankers and government bureaucrats do not qualify as normal humans. Bank lending officers are not promoted for being good business persons and for saving a client, they are promoted for not making mistakes. Jimmy Stewart in "Its a Wonderful Life" is the last of the human bankers. You can see what sort of trouble he got into.
Indeed, today, operational level bankers do not care if they have a good chance of recovering the debt. Their main goal is to get the file off their desks before a supervisor starts to notice the slow moving files. All that matters is the big-picture number crunching. You see it is too costly to save a client from a machine's point of view.
Saving and keeping a client is irrelevant. Banker logic is this: "I will be noticed if this does not go away."
The other exception to the rule of reason is the government, especially tax departments. Bureaucrats are the same: get this file off my desk. They do so with the righteous smugness of one who has never had to make a payroll. You can't even talk to them about the real world.
Rule 1: The bank is my enemy.
Rule 2: The government is my enemy.
Rule 3: Avoid making deals with the devils.
AVOID DEVILS: Bankers and Bureaucrats
I am advising you to think of cash flow problems in a business like manner. When you make credit/bankruptcy decisions be aware you are in a war in which your weapons are few and your enemies have endless resources and no remorse.
You have to eat, your kids need a warm house, and you need to focus on earning an income. Do not become a prisoner to debt collectors, lawyers, and your own sense of morality.
The loving, friendly, customer service driven bank which gave you a thermos for opening account will become a night stalker who resorts to fear, intimidation, and guilt to extract as much money as it can from your dying corpse.
Only when you throw your hands up in defeat, do the banks take notice. As long as they can threaten money out of you, the game works. When you tell a collector, "My credit is ruined and I have no money, so do what ever you need to," you have removed all power from the collector.
In better banks, when a debtor in collection calls and asks for a statement of his full debt, the collector will immediately hand off the call to a supervisor. The reason is the debtor is probably asking for the final number to use in a bankruptcy filing. A smart bank will want to stop that. Sometimes, they may have you try the ultimate con game: credit counseling services, which are supported by the banks. Bet you didn't know that.
Stay calm. Get objective opinions. Think clearly. Make financial projections. Think like you are your own financial consultant and stop reacting like a wounded animal. Then, read my other articles.
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