Businesses facing serious financial troubles can benefit from the fact that many have been there before. If you represent a business or you are the owner of one, know that there is nothing wrong with filing for bankruptcy. Not only is it a common move for businesses—large and small alike—but some options may give you the time and restructuring your business needs to thrive in the years that follow. You will want to consider a few factors, however, and ask yourself some important questions.
1. Do you want to keep your business moving or close it?
It may be that your business is in trouble, but not the kind of trouble that leads to losing all your assets in order to obtain a fresh start. If you are hoping to keep your business, you may want to consider chapter 11 reorganization bankruptcy which would allow you to readjust and pay off debts within a certain timeframe.
2. Get to know the different bankruptcy types
Especially when it comes to chapters 7 and 11, there are stark differences between bankruptcy types. Knowing which is best for your business starts by understanding how each type works.
3. Bankruptcy does not discharge all debts
Come into your bankruptcy with realistic expectations. While the bulk of your business’s debts may be discharged upon bankruptcy, some may not. You will still owe any unpaid taxes, for example, following the bankruptcy.
4. Consider life after bankruptcy
Do you have a plan for your business or your endeavors following the bankruptcy? You will take a significant hit on your credit. Planning ahead of time may help prevent serious challenges down the road.
5. Is a lawyer necessary?
Hiring an attorney is not a requirement for filing bankruptcy. But you will want to ensure that you are making the right decisions throughout the process and that you are accurate in all administrative steps. A lawyer can help oversee your case and protect your interests.