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HOW WILL BUSINESS BANKRUPTCY AFFECT YOUR
BUSINESS
Being the owner of a business, filing
for bankruptcy is one of the most
difficult decisions or actions in your
life. You will feel really bad that all
that hard work and effort did not pay
off well. You will start losing
confidence in your self and curse your
fate for letting it happen. However,
before filing for bankruptcy you have to
do extensive research to find out if
there are any better alternatives for
you and your business which does not
destroy your business to such an extent
that it cannot recover. It is highly
recommended that you take expert advice
from proper lawyers before you take this
extremely step. However, if all your
resources are exhausted and you are
still in huge amounts of debt then the
only option for you is “Bankruptcy”. The
relief and the lease of life that you
and your business get when you file for
bankruptcy outweighs the setbacks and
stress such as loss of your business or
harassment from your creditors.
Filing for bankruptcy may be your only
option to keep your business from being
destroyed by the weight of its own debt.
Most of the public companies choose to
become bankrupt under chapter 11 due to
the fact that they will still have
complete control over their companies
even though they have filed for
bankruptcy. Under chapter 11, you have
the option of consolidating all your
outstanding debts and coming out clean
within a span of 5 years.
The bottom line is: your creditors are
not at all impressed when you file for
bankruptcy though it is under chapter
11. The reason for this is, your
creditors will not get their payments
and more over you are no longer obliged
to pay them back. Therefore, if your
creditors harass you to pay back their
loan then you can threaten them by
saying that you will file for
bankruptcy. No creditor would like any
business to file for bankruptcy because
they loose a lot of their money.
However, don’t think that filing for
bankruptcy will do you or your business
any good. You will find it extremely
difficult to get funds for your business
in the future. No lender will be willing
to give you any money unless you prove
your credibility.
The other option for a business is to
work closely with its creditors and
overcome the financial problems. The
creditors can meet with the business
owner and agree on a repayment plan
which is convenient to both the parties
involved. Once the plan is finalised the
bankruptcy channel can be followed so
that the plan is implemented properly.
This will allow for a proper and
systematic procedure to be followed. The
claims of all creditors’ will be
addressed in a single proceeding in the
court. This method will decrease the
doubt in the minds of the creditors and
therefore, they will not have to file
their suits individually. Declaring
bankrupt will decrease your credit score
by a whopping 200 points. |
