According to data recently provided by Epiq Systems Inc., and distributed by the American Bankruptcy Institute (ABI), commercial bankruptcies in the U.S. increased 10 percent in July 2016 when compared to the same month just one year earlier. This marks the ninth straight month in which commercial bankruptcy filings have experienced year-over-year increases.
While this increase certainly indicates that more businesses are taking advantage of the many benefits bankruptcy can provide, it is important to note that many individual consumers are also seeking bankruptcy protection – especially in Tennessee. In fact, according to the Epiq Systems data, Tennessee averaged 5.56 personal bankruptcy filings per 1,000 residents in July – the highest rate in the nation, and more than twice the national average of only 2.53 filings per 1,000 people.
However, these high rates are not necessary surprising, especially when one considers the many benefits of bankruptcy – particularly for business owners.
5 Benefits Of Filing A Commercial Bankruptcy
There are many potential advantages when a business owner files a Chapter 11 (reorganization) bankruptcy, including:
- You Get An Automatic Stay: When you file for bankruptcy, you will get an automatic stay – meaning all debt collection actions against you, including lawsuits, foreclosures and repossessions, must stop immediately.
- You Are Still The Boss: If you are operating a business, you can continue to do so during a Chapter 11 bankruptcy, which means you are still in control. Simply put, you can do what is necessary to avoid losing customers.
- You Can Renegotiate And Restructure Debts: One of the most significant benefits of Chapter 11 is that it gives you an opportunity to negotiate with debtors and restructure your debts or even reduce high interest rates. In some cases, you may even reach a settlement in which you only have to pay a percentage of your original debt.
- You Can Recover Involuntary Transfers: Once you file for bankruptcy protection, you may be able to avoid certain actions taken against you, including some bank levies, liens, garnishments and even repossessions. Basically, you may be able to recover what you have already lost.
- You Can Strengthen Your Business: Bankruptcy will allow you to reorganize and/or reduce your debt, thereby putting your business in a better position to be successful.
Quite simply, a Chapter 11 bankruptcy gives struggling businesses the opportunity for a fresh start. Therefore, if you believe bankruptcy may be the best option for your business, it is a good idea to contact an experienced attorney as soon as possible. Give your business the second chance it deserves.