Baltimore’s bankruptcy lawyers actually have a part to play in settling large amounts of unpaid and overdue debt both at the individual and corporate levels. Read this blog to learn more about debt and the key on how to actually turn debt into a good thing.
Even when talking outside the topic of bankruptcy, debt is a cunning and consuming beast that has dogged the lives and financial well-being of many people from all walks of life. Debt, at its very simplest, is “the state of owing money to another person”.
In more professional terms, debt is defined as the amount of money borrowed by one person/party from another, often used to make large purchases that are unaffordable under normal circumstances. Debt is usually settled with interest added to the original amount of money lent or borrowed.
Baltimore’s bankruptcy lawyers have seen multiple cases of debt burgeon out of hand. When things become too much to handle, that’s when the specialists step in.
Let’s see what part debt has to play in both our every day and corporate lives:
Debt on an individual level
We might not know it, but a significant part of our social lives and spheres are influenced and affected by debt. The kind of debt that we have on an individual level exceeds money—we often use the words “in debt” as a show of gratitude to people who looked out for us and cared for us during the lowest troughs of our lives. Some cultures even reform the concept of “debt” and consider it a critical factor in the dynamics of social relationships.
Debt on a corporate level
Veering away from culture and sociological analysis, we recognize debt for the crucial role it has to fulfill in the corporate and business world. Different scales of businesses—small, medium and large alike all have had their own encounters with debt.
Contrary to common knowledge, debt isn’t always a bad thing. Much like how it helps juice our social dynamics, debt helps businesses and companies communicate, stay in touch, and work with each other.
When it comes to the corporate level, there is good debt and bad debt. Good debt is an amount of debt among corporate entities that is conducive to important expansion opportunities. Bad debt is debt that has, due to interest, grown too large for borrowers to pay back.
There are many factors and metrics taken into consideration when determining whether the amount of debt, or leverage of a company is within a healthy and acceptable range.
Avoiding “bad” debt
Ultimately, self-knowledge is the key to avoiding sinking to neck level in debt. Being properly in tune with one’s own resources, assets and capabilities, both as an individual or as a corporate entity, is the first step to preventing any tragedies that are caused by debt.
Through financial literacy and self-knowledge, you know the financial limits of yourself as an individual and as a corporate entity or business. These limits will act as the yardsticks to determine when debt becomes too much.
Getting swamped by too much debt and how to get out of it is another discussion. But did you know that declaring bankruptcy actually clears you of some specific types of debt? Stay tuned for further discussion on this topic. For assistance with bankruptcy processes and procedures, call Richard Hackerman, renowned Baltimore bankruptcy attorney. Contact him at 410-243-8800 or 888-243-5500.