Most entrepreneurs envision themselves in a successful state in their lives within a few years of establishing their business. However, we all know there is no certainty in that knowing the fact some businesses file for bankruptcy even after half a century of successfully delivering goods and services. Perhaps the greatest hurdle in this is the stage involves when you begin to contemplate and accept that bankruptcy has now become an option for you, and worse when you think it’s the only way out.
However, if you have been stressing out lately because of the instability of your business, maybe it is indeed the perfect time to ask yourself, “Bankruptcy—is it really an option for me?” Well, let’s find out.
You’re Losing Money
One of the most obvious telltale signs that you are currently on the red alert for a bankruptcy situation is when you notice a significant loss of money. It can manifest in many ways such as:
- Not knowing where your money went – no matter how hard your accountant is trying to make sense of your balance sheets, some transactions just don’t add up because of missing receipts or vouchers. This could mean that your money is leaking towards places where it shouldn’t be.
- Your product or service sales are declining – you have tried every possible advertising and marketing strategy that you can think of but so far, your sales are still declining. Maybe the timeliness or significance of your business is no longer relevant to the current era.
- You no longer know where to get money for your employees’ paychecks for the next few months – this is perhaps one of the most stressful thoughts to think about. Your employees are doing services for you in exchange that you offer them a monetary compensation, but what if you still need their services but you no longer have the means or resources to provide their payroll for the next few months? Your employees are relying on you but if you no longer know where to obtain the money for their next payroll, then you surely are on the brink of bankruptcy.
- You have no idea how to pay off your creditors – you are searching for ways to increase your sales and ROI but nothing seems to be working, and you want to do anything but sell your assets just so you could pay off the thousands to millions of dollars that you owe from your creditors. If this has become a prominent problem, then filing for bankruptcy is now one of your top options.
Realize that You Will Gain Some and Lose Some
There are several types of bankruptcy tailored to the different situations that you could possibly be in, but it doesn’t mean that filing for bankruptcy will automatically mean you will lose everything you have worked hard for. Here are three of the most common bankruptcy types that most people file for:
- Business Bankruptcy (Chapter 7) – this will fit perfectly with your situation when you want to pay off your creditors but even your existing assets cannot fully compensate the debt. This will also apply when you have fully accepted that your business is going nowhere and that it’s better to start anew instead.
- Business Reorganization (Chapter 11) – you believe your company has a chance for redemption so you simply want to reorganize your business and devise a strategy on how you plan to pay off your creditors within a period of time.
- Personal Bankruptcy (Chapter 13) – the type of bankruptcy that is perfectly tailored to customers. Filing for this type of bankruptcy will mean that the amount that you pay to your creditors will be relative to your income and the total net worth of your assets as well as your properties.
If It’s the Best for Your Situation
Being in the business industry means you will have to pass through several bumps on the road on a daily basis. However, facing the danger of bankruptcy isn’t just a mere bump—if anything, it’s more like a mountain that you should climb over to get across to the other side. While filing for bankruptcy is not the easiest decision to make, it surely is one of the most important ones that you will have to deliberate on. This is mainly because finalizing your decision to file for bankruptcy does not only affect your life but it also affects the lives of the people you have taken under your wing—it’s a domino effect of decisions that you and the people surrounding you may not be ready to face yet.
That is why it is so important that when it comes to life-changing decisions such as this, you need to have a well-trusted attorney that you can confide in to help you weigh out your options and enlighten you on the most rational decision to make. Not only will you have a guiding light on such a strange path, but you will also be more confident in making the wisest and most logical decision that is best for your situation. If you want to educate yourself on the legal processes of filing a personal bankruptcy, do click here to get started.
Bella Flanagan has dedicated much of her life to law, and her pieces as a writer are imbued with her wisdom obtained from over 20 years of experience in business. Bella enjoys hanging out with her grandchildren when she has the free time.