Is Bankruptcy The Right Choice For Your Struggling Business?
In the current economy, there are still many businesses that are struggling to make ends meet as they provide goods and services to their customers. If you own a business that seems to be floundering, bankruptcy may be the best choice for the company. It can provide relief from debt, and allow the business owner to continue on to other endeavors that may be more profitable. If you are wondering whether bankruptcy is the right choice for you, it can help to know some of the basic information about how the process works and how it will affect the future.
The First Step
One of the best things to do when declaring bankruptcy is to hire an attorney. A bankruptcy lawyer can help you throughout the entire process so that you can preserve assets and make decisions that will help you in the future. Some people may wonder how they can afford a lawyer if they are already having a hard time paying all of their debt. Realistically, because a lawyer can help you discharge debt, it is worth making the lawyer fee a top priority – even over older financial obligations. In the end, the whole bankruptcy will go a lot more smoothly if you have someone to guide and advise you.
Different Types of Bankruptcy
One of the most common misconceptions is that it isn’t possible to declare bankruptcy more than once within a seven year period. Actually, there are several different types of bankruptcy; all of them have different rules. Four of the most common types of bankruptcy for businesses are:
- Chapter 7 is designed to quickly liquidate the business’s assets and pay off debts
- Chapter 11 is designed to help a struggling business get back on its feet by negotiating debt payment amounts and plans
- Chapter 12 is specifically for family farms, allowing them to continue their farming business while reorganizing and restructuring to meet debt payment plans
- Chapter 13 can be filed by an individual who has unmanageable debt due to a failed business venture
Future of the Business
Depending on the type of bankruptcy that you declare, your business may be able to continue to operate while the bankruptcy is going on and afterwards. In some cases, poor management or other factors have led to the accumulation of debt, but the company can actually go on to become very successful. For these businesses, bankruptcy gives them a better chance for the future. In other cases, declaring bankruptcy for a business is the safest way to get out of the business while protecting personal assets. To learn more about bankruptcy, call California Bankruptcy Relief at 888-748-0025.
