The holiday season can be a stressful one for anyone. Add to that seasonal stress the worries of a business struggling with debt, and you may feel like you have nothing worth being thankful for this holiday season
If your business is buried in debt or having trouble paying bills, learn more about how business bankruptcy can give you something to feel thankful for in the coming year:
There are many reasons why a business may consider filing for bankruptcy. The last three years have taught the entire world to be kinder when judging the financial decisions of others. Extending some of that grace to yourself and your business during these difficult financial times is important.
Whether you are buried under a mountain of unmanageable debt or just need help to reorganize those debts to make a better plan for the future, business bankruptcy might be the answer.
Businesses that find themselves in need of financial relief have two options when it comes to bankruptcy – liquidation or reorganization. This is the primary difference between Chapter 7 business bankruptcy and Chapter 11 business bankruptcy.
Chapter 7 business bankruptcy is often referred to as liquidation bankruptcy. This is true for personal bankruptcy, but also for a Chapter 7 business bankruptcy. During this process, the company undergoing bankruptcy will liquidate all assets and will cease to operate. This is the best option if there is no way for your company to continue serving consumers or clients.
Chapter 11 business bankruptcy offers a much more flexible approach. This is often referred to as a reorganization bankruptcy. This type of bankruptcy allows a company to reorganize its debt and sell some of its assets to offset outstanding debt. If enough debt can be unloaded, the business can stay in operation – which is ideal for many reasons.
While a Chapter 11 bankruptcy can be very beneficial for a business, it is not a cure-all. Sometimes, even the best-laid plans for financial recovery are not enough. If a business cannot get rid of enough debt to satisfy creditors and maintain everyday operations, it may still be forced to close down. Many major companies that have struggled for years to remain operational have ultimately fallen victim to this fate.
This is why a well-crafted bankruptcy plan is important. By making a workable plan upfront – and maintaining communication with an experienced bankruptcy attorney throughout the process – your business can come out on the other side of bankruptcy better than before.
Are there drawbacks to filing for bankruptcy? While the process is not as negatively impactful as many people assume it is, it does have some consequences that business owners should be aware of before choosing to file.
First, your credit report will be impacted by bankruptcy. This is not something that can be avoided, but the impact can be minimized. By managing your finances carefully after a bankruptcy, you can actually end up with a better credit score than before – especially once the bankruptcy’s impact has run its course.
You may also lose property or other assets. Depending on the type of bankruptcy you file for, you may have to sell or remit ownership of certain property or other assets to the bankruptcy estate. This will help offset costs for creditors. However, a bankruptcy attorney can help you determine which assets may be exempt from this.
Lastly, bankruptcy is a public record. It may make some creditors less likely to work with you in the future, as well as tarnish your business’s reputation. Thankfully, this is usually a short-term problem.
It is important to remember that while bankruptcy can and does have consequences, the benefits often outweigh these. A well-planned business bankruptcy can leave your business in a much better place than before – especially when you are guided through the process by a knowledgeable bankruptcy attorney.
Other than getting creditors off of your back, you might not be aware of just how many benefits bankruptcy can have for your business. After all, most people only think about bankruptcy in terms of the impact it can have on credit or other “negative” connotations.
What they do not realize is just how much freedom it can give you to build your business in a better way than ever before!
Here are just a few of the reasons why companies large and small have chosen to file for bankruptcy – and why it may be the best option for your business, too:
Business bankruptcy can be a very intimidating process. Just the idea that your business has come to the point of needing that kind of financial fresh start can be upsetting – but it does not have to be.
At the Van Horn Law Group, our experienced team of bankruptcy attorneys help Florida business owners just like you get the help they need for a better financial future. If you are concerned about what the future will look like for your business, take one more worry off your plate this year. During this season of thankfulness, we are grateful for the opportunity to help you through your business bankruptcy – and give you something to be thankful for in the year to come.
If you are ready to learn more about how bankruptcy can deliver a fresh start for your business’s finances, give us a call today!
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