Filing for bankruptcy should not be a quick or easy decision. Most of our cli
5 of Our Favorite Tips for Dealing With Business Bankruptcy
As a business owner, the time and money spent in growing and managing my business has been worth so much. The idea of watching all of that crumble away into nothing is enough is terrifying but I have also learned that failures are simply an opportunity to learn from my previous mistakes and to take a Leap of Faith where others may quit.
Anyone who currently owns or has owned a business in the past understands that worrying comes with the job, especially when you experience dry patches. My mom calls it her slow period, they come and go in the hair braiding community, especially during the holiday season.
If you are not great at managing your money, a slow period can be detrimental to your business, and for some can result in getting so behind that catching up is almost impossible. For some, the only solution is business bankruptcy.
If you are considering business bankruptcy, these five tips may be just what the doctor ordered.
1. Realize that sometimes bankruptcy is your best option: Forbes
In certain cases, business owners might find that filing for bankruptcy is simply the best choice for their own mental health.
“I can’t help but wonder if it would have been easier to file bankruptcy and move on,” says Michael Hobbs. “Those I’ve spoken to said filing for bankruptcy was gut-wrenching, but it was also therapeutic, because the pain came to an end when the filling was complete. Fighting for survival is a vicious and cruel experience that has no obvious end in sight.”
This isn’t a choice that someone else can make for you, but having good advice can help. A financial professional can help you decide if your company has a reasonable chance of recovery or if bankruptcy is really the best way to go. If you do decide to file for bankruptcy, try not to think of it as “giving up.” Think of it as starting fresh. Before you can succeed, you must first accept failure without fear.
2. What are the Types of Bankruptcy for Individuals? Money Girl
The most common types of bankruptcy for individuals are called chapter 7 and chapter 13:
A chapter 7 bankruptcy liquidates all your non-exempt assets to pay off creditors. It’s generally the best option when you have a large amount of unsecured debt, like medical bills and credit cards, and little income.
A chapter 13 bankruptcy reorganizes or adjusts your debt using a repayment plan. It’s the
best option if you have income, but want to avoid foreclosure of your home, or need time to catch up on outstanding debts.
3. Don’t Make Preference Payments to Creditors: NOLO
If a friend, relative, or business associate has lent you money, you may be tempted to try to repay some or all of it before filing bankruptcy. Bad idea. When you file for bankruptcy, the bankruptcy trustee will scrutinize all payments you make during the year before the filing, to make sure that some creditors weren’t given an unfair advantage (called “preference payments”). The trustee will want to “recapture” (take back) any preference payments you made to creditors within one year if those payments were made to a relative or close business associate (an “insider”) — and will divide them equally among all creditors. If your relatives or associates can’t come up with the money that you paid them, the bankruptcy trustee can sue them to recover it.
You are legally allowed to pay one unsecured creditor ahead of the others if the creditor is not a close relative or associate — for example, you can choose to pay the business line of credit that you signed a personal guarantee on before you pay your suppliers. The bankruptcy trustee will, however, look back 90 days at payments you made to these regular creditors. The trustee can make a company that was paid “disgorge” (return) payments of over $5,475 and spread the money among all of your creditors. (But if fewer than 51 percent of your debts are from your business operations, the trustee can force a company to disgorge only payments of more than $600.)
Read more about it here: http://huff.to/2dDH8BK
For more information regarding divorce, we recommend that you contact us at the Law Office of Alice Pare at 301-515-1190 or visit our website at: https://www.alicelaw.com
Do not at any time take the risky move of going at it alone. We have a wide choice when it comes to going it alone but with the professional advice, you will need.
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