Can bankruptcy give a new life to your business when your company is going under?

Are you someone who has been pondering over the financial health of your business? Do you think your business firm is knee-deep in debt and has no way out? If business debts have started interfering with your personal life, you might as well consider business bankruptcy options. 

Besides the confusion that comes along with not understanding the legal jargon associated with bankruptcy, this is an overwhelming process. Before you choose bankruptcy in Orlando, read the concerns of this article to educate yourself on the heads and tails of bankruptcy. 

See also  A Brief Guide To Business Energy Contracts

Potentials reasons behind filing business bankruptcy

During tough times, when your business has no positive turnovers to look forward to, bankruptcy might be the sole option left. Here are a few reasons to file for business bankruptcy:

  • To put down your shutters as soon as you can: If you file for bankruptcy, you no longer have to worry about concerns like selling off your inventory, collecting unpaid payments, or letting go of your business equipment. You can close your business immediately. 
  • To keep your company afloat: On the contrary, if you wish to keep your company operating, you can file for bankruptcy. This option will let you continue your business on a slower scale while reducing your debt. 

But what are the causes of business bankruptcy? Well, you might be left with bankruptcy as the only option due to:

  • Lack of favorable market conditions
  • Hasty decisions are taken in the past
  • A dearth of adequate financing
  • Lawsuits
  • Problems in cash flow

Types of business bankruptcy you can file

CHAPTER 13 BANKRUPTCY

See also  What Role Does Tax Planning Play in a Small Business?

To be honest, Chapter 13 bankruptcy is more apt for individuals. However, sole proprietorship businesses can file for this type since these are indistinguishable from the business owners. If you want to just reorganize your debts rather than opting for liquidation, Chapter 13 is a viable option for you. The court will provide you with an alternative debt repayment plan and tell you how to repay your delinquent debts. 

See also  Excellent Marketing Strategies That Will Make Your Business Flourish

CHAPTER 7 BANKRUPTCY

When you foresee no future for your business, Chapter 7 is the best option. This bankruptcy type is also called liquidation. If your business debts are extremely overwhelming and you are sure you can’t pay them back even through reorganization, file for Chapter 7. Before the court approves this type for your business, the business owner has to pass the ‘means’ test. Once he qualifies, a trustee will be assigned by the court to possess all business assets and disburse them among creditors. 

CHAPTER 11 BANKRUPTCY

In case you have a realistic chance of turning things around, Chapter 11 bankruptcy can be a worthy option. This type is commonly used by corporations and partnership businesses. Sole proprietors also use this type when their income levels are extremely high to qualify for a Chapter 13 debt repayment plan. In this type, the company will file for a detailed debt reorganization plan to repay its creditors. 

Therefore, if you’re a poor business owner who is worried about the fate of your business, you may think of considering the above-listed bankruptcy options.

Latest

8 Banner Ad Design Tips to Get More Clicks

Banner ads are everywhere, and although they may seem unappealing to some of us, banners get more clicks than text links. That's because banners...

6 Instagram trends every brand should take advantage of

Instagram's trends are going to come up all the time, and not all of them are worth exploiting.

Why Intraday Trading is Popular Amongst Stock Market Investors profits, Loss and Risk in 2022

Intraday trading has become increasingly popular amongst stock market investors in recent years. This type of trading allows investors to buy and sell stocks...

Event Hire – How To Choose The Best Event Planner For The Service

Have a big office party coming up and want this event to be absolutely picture-perfect? If yes, a professional event hire team can help...

​​How to Create a Good Documentation Strategy: 7 Tips

If you're in charge of your company's management, you know how much paperwork gets generated, how much time goes into processing it, and how...