According to numbers recently reported by the American Bankruptcy Institute (ABI), there were 38 percent more commercial bankruptcy filings in September when compared to the same month just one year ago.
Unfortunately, this one-month spike is not an anomaly. In fact, commercial bankruptcy filings among businesses are up a whopping 28 percent during the first nine months of 2016.
While many reasons have been offered as to why more businesses are seeking the protected of bankruptcy, the most significant reason is that many businesses have simply acquired too much debt – debt spurred by historically low interest rates and the expectation that the economy would improve more than it actually has.
Regardless of the reason, however, there is one thing that remains certain: bankruptcy is often the best, and only, option for businesses struggling to survive.
How does bankruptcy help?
Quite simply, bankruptcy can provide several benefits to a business drowning in debt, including:
- Bankruptcy stops all debt collection actions against the business, including lawsuits, foreclosures and other attempts to collect debts
- Bankruptcy provides businesses the opportunity to restructure debts and negotiate with creditors
- Bankruptcy allows businesses to become stronger by reorganizing, or completely eliminating, debt
If you are a business owner, it is also important to note that you can still control your business if you ever decide to file for Chapter 11. However, it can sometimes be difficult to navigate the often-confusing bankruptcy laws, which is why you should always seek the counsel of an experienced bankruptcy attorney should you have any questions.