Maintaining a business is far from a smooth operation. With so much competition, and the pressures of meeting payments for staff, rent, tax, and anything else required under a specific area of trade, it’s an unfortunate reality that many businesses may not see ultimate success.
Bankruptcy is a term used to describe a situation in which an individual, or company, is unable to pay off their debts. To learn what to do in the event of a business bankruptcy, read on.
1. Prepare to file for bankruptcy
The first stage is to prepare to declare bankruptcy. There is no set time when this should be done, but it is advised that if your business will need at least five years to pay off its current debts, it’s time to consider seeking help.
2. Apply for credit counselling
Once you have complied your financial records, the next required step is to receive credit counselling for your case. This needs to be done at least 180 days before you are due to take your case to court. It is important that you don’t miss this step, as you will be expected to show certification of completion before your debts can be cleared.
3. Consider hiring a bankruptcy lawyer
Before you officially declare bankruptcy, you may wish to hire a bankruptcy lawyer likeKT Bankruptcy Lawyer, who can represent you in your case. This is not required, but bankruptcy lawyers can provide the necessary support, professional knowledge and stability a business needs at a time of such uncertainty, and help to increase the possibility of a positive outcome.
4. Attend a meeting with your court trustee
Once your case has been accepted, you will be expected to attend a meeting with your court trustee, where your case can be discussed in more detail. This is a time for questions to be asked from either party, and can help your court trustee to learn more about your personal financial situation.
5. Wait to learn the outcome of your case
The overall court proceedings for a Chapter 7 bankruptcy, one of the most common forms of bankruptcy for businesses and individuals in the US, usually last for around three months, depending on the nature of the case. Once you learn the outcome of your case, you can move your focus onto turning your financial situation around for good.
Bankruptcy often has negative connotations, when actually, it can be a positive thing, allowing a business to clear the slate and start afresh. The common outcomes from proceedings are that the court clears a business’ debts by ordering the selling of business assets, or provides the business owner with a plan to pay the debts off themselves.
While your credit score will be affected by bankruptcy, it’s a small price to pay compared to extending the stress and pressures of trying to pay off debts that you simply can’t afford. Filing for bankruptcy allows you to put the past behind you and start over, learning from your previous mistakes.