Your business is bogged down by debt, you’re unable to stay current with your obligations and your employees are beginning to worry about what the future will bring. While this isn’t a situation you want to be in, it’s something that many business owners have dealt with over the years.
Bankruptcy isn’t the right solution for every business owner, but there are times when it’s the best way to discharge or reorganize debt.
But before you go down this path, here are some questions you absolutely need to address:
- Is bankruptcy the only solution? It’s always an option to consider, but you should look into other strategies, too. For example, you may be able to negotiate your debts with creditors, thus allowing you to escape trouble without going through the bankruptcy process.
- Which type of bankruptcy is best? For instance, you’re likely to compare Chapter 7, Chapter 11 and Chapter 13. They may be similar in some ways, but they’re unique where it matters most.
- What are your future plans? There’s a big difference in approach among people who want to file for bankruptcy and close up shop and those who want to keep their business open in the future. You need to plan for what comes next.
- How will you prevent the same problem in the future? It’s not good enough to set the goal of keeping your business open after bankruptcy. You must have a plan for doing so, and that starts with understanding how to reorganize your company for future success.
- Are you familiar with how to operate a business that’s in bankruptcy? Even though you can keep your doors open, you now have the bankruptcy court looking over your shoulder. You’re required to ask for approval for most of the purchases you’ll make.
When you answer these questions up front, you’ll better understand the business bankruptcy process and whether it’s the right solution for your company at the present time.
The decision to file for bankruptcy, either as an individual or company owner, is a far-reaching one. It’s critical to understand the types of bankruptcy, the process, the impact on you and your company, and the steps you can take to protect your legal rights.