Your business debt is a reality – it has already happened. Now is not the time to wonder what would have happened if you had done something differently. Now is the time to start thinking about how to save your business or avoid personal liability for its debts.
Bankruptcy is not the curse. It is the cure. It has helped countless businesses stay viable and emerge on a much stronger financial footing. Here are five reasons why you should not be afraid of business bankruptcy:
1. You will continue to run your business
During a Chapter 11 bankruptcy, you will continue to run your business as you normally would. You will stay in control of business decisions and not lose your customers or the goodwill you have developed with the community.
2. All lawsuits and collection actions against your business will stop
The moment you file bankruptcy, the court imposes an automatic stay, or automatic injunction. This stops lawsuits, foreclosure activity on your property, repossessions, collection calls and other creditor actions against you. During the duration of the bankruptcy, you will be able to focus on the reorganization and your day-to-day business operations, rather than spending your time worrying about creditors.
3. You can protect your business assets
Through bankruptcy, you may be able to protect your assets by:
- Avoiding wage garnishment and bank levies
- Recovering certain business assets lost before you filed for bankruptcy
- Renegotiating or canceling certain contracts
- Improving interest rates on secured loans
- Deferring rent and other debts
- Curing loan defaults
4. Your business may come out of this stronger than ever
Through a Chapter 11 bankruptcy, you will be able to keep your business. The reorganization plan you create and present to creditors may allow you to reduce the amount of debt you face and put you back on track as a profitable business.
5. If your business must close, you can avoid personal liability
If your business will be unable to meet its financial obligations in the future, you can file for Chapter 7 bankruptcy, which can protect you from personal liability for your business debts.
Your business deserves a second chance
Bankruptcy is a second chance. It is a way for struggling businesses to start anew. You have not failed. You have simply hit a roadblock. Bankruptcy may be the best way for you to move past that roadblock to a better tomorrow — for you and your business.