The sad reality is, that sometimes, declaring bankruptcy is the only option you have. That’s how life goes. If you have piled on debts that are hard to repay, collectors knocking on your doors, or mortgage is hard to fulfill your need to pull this move. There’s nothing dishonorable in it. Of course, it is not some magic solution. No, it is not and you need to be aware of the fact that there are consequences. For one, your credit score will suffer the most.
Bankruptcy should be used only as a last-minute solution. You need to give it a long and thorough thinking process. As you probably understand it can save your home, keep away the pesky collectors, or make your debt go away in a way. But, we are obliged to repeat. It is not going to make your problems disappear. In most cases, it is going to cause long-term damage to your finances. Without proper knowledge on the subject, you’re not even aware of the way it can negatively affect your life. If you care about your future, you’ll be careful approaching this process. If you want to learn at what point should a business owner declare bankruptcy, keep reading this article. First, we’re going to tell you a few things about the types of bankruptcies there are.
The Shapes And Sizes of Bankruptcy
Bankruptcy cases are no joke. If you become a part of one, it will be handled by a federal court. There are a few types of bankruptcy out there. Those that are encountered the most are Chapter 7 and Chapter 13. But, if you’re a business owner of a massive company you’ll be faced with a Chapter 11 bankruptcy. As for smaller owners, they can do their bidding through Chapter 7. This is no small feat and it needs to be approached with utmost care. This process is long, complicated, and above all else – expensive. Any business, regardless of its size and assets, needs to explore any other viable option before filing for bankruptcy through Chapter 7 or 11. This chapter includes severe reorganization that will cover all assets, obligations, debts, and earnings a company might have. So, if this is your Last Resort as Papa Roach sings it, let’s see when is the right time to get involved with this process.
When to Take The Deciding Step?
This is not hard to know, but it is hard to think about it and to put it in words. When you are a business owner there can’t be a worse thing in the world than having to end your venture. For one, let’s put a beam of light and hope for what’s about to happen for you. Some types of bankruptcy enable you to continue your business. Yes, you can continue to work with certain quotas filled. It all comes down to which type of bankruptcy allows what and how do you arrange your business. Also, it depends on how you started, what type of a firm you have run, and how it needs to be ended through this means. We already established the types of bankruptcy you probably are going to encounter on your road to saving or shutting down your business. Now, we’re going to explain them, not in detail, but when you need to apply each.
These are not the worst wounds you can have in life, but having to end your project stings, unless you’re the Gallagher brothers from Oasis. It was easy for them to end the best rock band of all times due to petty arguments. You don’t have to tear your firm down for small reasons, but when the time is due, these are the directions you must take. When it comes to Chapter 11, there’s still some hope left. If you’re still operating at an acceptable level, and you earn enough to cover your creditors with smaller rates, you can continue to work. Under these circumstances, and with a reasonable cash flow, not all hope is lost.
With Chapter 7 things get a bit bleeker. This is when all hope is lost, and you need to shut down. What this means is that you need to close if there’s no cash flow left. It is unfortunate but when it needs to be done, it’s not all that hard. With this chapter, the job gets done as clean as it can. It makes the whole process efficient and above all else transparent. For your future, the latter things are quite important.
Is There a Need For a Lawyer?
Is there a moment when one isn’t needed? Jokes aside, this is a serious question. Most people believe that when they’re going down they don’t need to spend even more, and an attorney is perceived as expensive. But, for the work they can do for you, any cost should be met. Any individual can file for bankruptcy on their own. This is a viable way to do things. But, both us, and good people from Scura, would tell you the same thing – this is not the way to approach this matter. While you can handle the matters on your own, you shouldn’t do it.
Filing for bankruptcy is a complex, complicated, and serious matter that requires a touch from professionals. If you do not file the right way your request will be denied which could jeopardize your future. So, if you want to get things done right one last time, you’re better off having an experienced lawyer in the field of bankruptcy proceedings. They can also help you to better understand the whole ordeal or to even give you an insight into possible alternatives. So, while you can do it yourself, we wholeheartedly suggest that you equip yourself with an attorney. In the words of Saul Goodman: “Look, let’s start with some tough love, alright? Get yourself a fine lawyer.” Yes, it’s not an exact quote but you get the point.