Hoping this is the right place to ask. My dad’s business is drowning in debt, and I’m trying to figure out what options he has before things get worse. The tricky part is that it’s business debt, but it’s affecting him personally too.
He ran a business since the early 90s, but COVID basically shut it down. He scaled it back almost entirely to cut costs, but now he’s stuck with debt from when the business was struggling. Some accounts have already gone to collections, and we’re trying to figure out how this will affect his personal credit.
Debt details:
SBA Loan from 2020: Started at $70k, now $71k with 3.72% interest over 30 years ($340/month payments)
Business credit line with Truist: $30k that renews every 2-3 years. It somehow got sent to collections recently, but Truist is offering to turn it into a 60-month term loan at 13.5% interest.
Wells Fargo Business Credit Card: $50k balance, making $1,200 minimum payments each month at 14% APR.
Is there any way to move these balances to lower interest loans or credit cards with better rates? Can he consolidate any of this to bring down the payments? I don’t even know where to start with helping him.
For now, my mom’s credit isn’t affected since everything is in my dad’s name, but this is obviously hurting both of them. He hasn’t taken on any new debt in the last 18 months, which is a plus, but the interest keeps adding up.
Any advice would really help—I have no idea what steps to take next.
So he’s sitting on $150k in debt with interest rates ranging from 0% to 14%… is the business still making money? Does he have anything he could sell? Could he just sell the business entirely? Also, is it an LLC?
@Marlow
The business isn’t making a profit—he’s just barely covering costs and making minimum payments. He runs a moving company, but I don’t think it’s worth much to sell. 30 years of profits got put back into the business, but things have been going downhill for a while. I think it was a corporation because the business name has ‘Inc.’ in it.
@Casey
Not an expert, but if he reinvested profits into equipment like moving trucks, he could try selling those to cut down the debt. If there aren’t any real assets and the business isn’t bringing in much, he might need to think about when to cut his losses. Sounds like that moment passed a while ago…
@Marlow
Completely agree. My mom and I have been telling him for years to close up shop before it got worse. Most of his debt probably came from keeping trucks running or replacing them. He already sold all but one truck and now just hires workers with their own trucks so he doesn’t have to worry about storage or maintenance costs anymore.
@Casey
That makes sense—basically transitioning into a consultant role instead of running a full business with all the overhead. Maybe he can keep some income coming in without taking on more debt. It sucks to run a business for 30 years and end up in this situation, but sometimes it happens. Wishing you guys the best, and hopefully someone with more expertise can chime in.
@Casey
You’d have to talk to a bankruptcy lawyer, but if the business was set up as an LLC or corporation, the debt shouldn’t automatically transfer to him personally. He could walk away from the business and let the bankruptcy handle the debt.
Personal bankruptcy is a different story—there are limits on protecting a home, so definitely talk to a lawyer to see what options he has.
Curious how COVID hurt the business? I moved during COVID, and it was the first time I ever hired movers. I feel like a ton of people were moving during that time because of low mortgage rates.
Zaid said:
Curious how COVID hurt the business? I moved during COVID, and it was the first time I ever hired movers. I feel like a ton of people were moving during that time because of low mortgage rates.
I think it was a mix of things—people losing jobs and not being able to afford movers, plus the ‘lock-in’ effect where people aren’t selling homes because interest rates are too high now. At least that’s my guess.