Think Your Business is Going Bankrupt? Think Again
If you or members of your family have business debts, it may be time to consider business bankruptcy. When a business is facing bankruptcy, there are two possible outcomes: liquidation or reorganization. Liquidation occurs immediately, though it does have some negative effects on credit ratings, payroll, advertising, and leasing opportunities, and can affect future business relationships. Re-consolidation, on the other hand, doesn't result in immediate liquidation, but it does allow you to reorganize your business debt into one payment instead of numerous payments.
Business bankruptcy focuses mainly on liquidating assets to repay outstanding creditors, or to create a strategic plan to ensure payment in the future. Business bankruptcy is often a lengthy, complicated process, particularly for large corporations. Many business owners would rather keep their business running while going through bankruptcy proceedings, which complicates matters. In order to avoid the complicated and lengthy proceedings of business bankruptcy, business owners should consider selling their assets, re-establishing themselves with new ownership, and finding a different way to pay their creditors. Business administration companies can provide expert advice and services for all of these options, allowing your business to emerge from financial hardship in a timely and affordable way.
One of the main benefits of hiring a business bankruptcy attorney is that they will help you determine the best course of action for repaying your debts. The attorney will first review your situation, taking into consideration your company's history, your financial situation, and your assets, liabilities, and debts. If they find that all of these factors are in agreement, your business assets and accounts receivables will be sold to pay creditors and eliminate your debts. Your business assets will be sold first to pay creditors.
If your business has more than $7500 in debts, you may be eligible for filing under chapter 7. This type of filing allows business owners to declare personal bankruptcy. If this is the case, your business will file under the chapter seven form. You will be granted a temporary restraining order against all creditors while the case is being fought in court, preventing them from harassing you or your family. A summary judgment will then be issued in your favor in court, allowing you to legally wipe out all outstanding debts, meet back payments, and pay over what remains.
Some business owners, though, may elect to file under personal bankruptcy in order to avoid the complex proceedings of a business bankruptcy. Personal bankruptcy protects a business owner by declaring their personal assets are not protected from creditor claims but declaring personal bankruptcy does not eliminate business debts. To protect your business assets, you will need to file under the form of chapter 13.
Filing under the form of chapter 13 is considered an expensive endeavor. For this reason, many business owners opt for the simpler option of declaring personal bankruptcy. Unfortunately, declaring business debts personal bankruptcy does not immediately eliminate all debt. In many cases, creditors will still be able to collect a portion of the debt that has not been completely wiped out through personal bankruptcy. Creditors can also continue to pursue collection efforts after the business assets have been wiped out.
Many business owners find that declaring business bankruptcy does not solve the problem of past due invoices. For this reason, many business bankruptcy attorneys offer debt settlement services. By negotiating with creditors and collecting a portion of past due invoices, these professionals can help you wipe out debt and begin repayment processes. These services may be necessary for small businesses that do not have substantial debt. However, if you owe several hundred dollars in past due invoices, you may find that hiring an attorney is worth the time and effort to resolve the issue.
Today, the business bankruptcy system makes it possible for small businesses to retain key employees while resolving their issues. Although the bankruptcy system may make some business owners feel helpless, it provides an opportunity to retain key employees while paying down debt. While the bankruptcy system may create certain difficulties, it also allows a business owner to preserve jobs by creating a payroll liquidation and by obtaining a short-term loan or equity financing.
If you enjoyed this article, please share it and find me on social media @adellapasos
Buy My New 5 Star Book on Amazon: Leaders Build Business in Print or Kindle
These are solutions I recommend for businesses 👇
Are you using these essential business tools?👇
------------------------------------------------------------------------------------------------------------
Affiliate Disclosure
This website uses affiliate links and does earn a commission from certain links. This does not affect your purchases or the price you may pay. We are independently owned and opinions expressed on this professional website are that of our own.
------------------------------------------------------------------------------------------------------------
About Adella Pasos
This Entrepreneur and Marketing Expert has shared her passion for growing brands from the ground up. She’s worked with Startups, Small Businesses, Fortune 500 Corporations and Entertainment Talent to help them recognize the value of marketing, and give her clients the ability to access their niche market via online, social media, mobile, merchandising, and events.
She hosts the What's Your Game Plan TV show features: Free Expert Advice, and Growth strategies for Business Owners Across the Globe. Access thousands of FREE Tips, Trends & Tools to Move Your Business Forward!