When a businessperson decides to venture into the world of the business industry, he or she only has one main goal for this—it is for the business to succeed. The business owner will not wish for anything less than to continually gain profits, expand the business’ influence outside the country of origin towards countries abroad, and to continue to grow its power as a company. However, not all things go according to plan. Whether it’s an economic crisis, a shocking betrayal of a co-owner, or mere financial mismanagement—sometimes the end result would be the need to file for bankruptcy.
If you are slowly noticing signs that your business is on the rocks, here are some key points for you to know when exactly bankruptcy is the right choice for your situation:
- You have no other means of compensating for the financial loss
Bankruptcy doesn’t happen overnight in a sudden shift of financial status. Instead, it is a series of events that will creep slowly into your financial stability by manifesting in several forms such as:
- Contemplating on having to terminate a few employees because you don’t know where to get their next paycheck
- Creating budget cuts such as lowering your contribution to your employees’ pension plans and health benefits
- Letting go of certain assets by selling some of your company’s valuable tools of the trade
- Selling some of your company’s departments and flagship products
- Giving up several branches and kiosks
- Noticing oddities in your company’s financial statements
- A high turnover of employees and executives
When those signs start to show up in your company’s status, it is time to contemplate whether or not you’re handling your business well and maybe determine if there is still a way of salvaging what can be saved rather than losing your business altogether. Hiring an accountant to know which area is generating less money than it should be is one step that can help you determine the next steps to take. However, if the stakes are too high and there are no other means of compensating for your financial loss, then maybe it is time to deliberate about filing for bankruptcy.
- You understand what you will lose when filing for bankruptcy
A new implementation for those who plan to apply for bankruptcy, individuals are required to undergo classes where they will be educated regarding bankruptcy, what you can keep, what you need to surrender, and what your other options are. You will have to attend a two-session class and each class will only cost you $50. It is only by then that you are free to proceed to the next few steps in order to determine if filing for bankruptcy is indeed for the best of your situation.
- You want to secure your assets and properties
When it comes to filing for bankruptcy, the misconception among people is divided into two categories: ones who believe that filing for bankruptcy will help you to keep your assets, and those who believe that you can’t keep anything. The truth is you can keep your house, your properties, your vehicles, household furnishings, bank balances, tools of the trade, and lottery winnings among others. However, if your trustee thinks that selling some of your assets would be deemed helpful to be used as compensation to pay back your debt to the creditors, then it can be imposed.
Filing for bankruptcy will always involve devising a plan on how you can pay your creditor within a certain time frame. The court will be strict on strongly implementing the devised plan and any failure on your part to disclose information to your trustee would mean that you will be liable for certain penalties.
- You have consulted a lawyer regarding your situation
Aside from attending the required classes, having a lawyer to professionally advise you with regards to the legal proceedings would be beneficial if you want to avoid making rash decisions that can greatly affect your future. By having an attorney to keep your focus, you will also have someone who will help you:
- Assess your financial situation
- Guarantee that your petition is free of any errors
- Provide you guidance through all the legal routines
- Protect you from creditors
- Offer you counsel for what’s best for your situation
- Give you peace of mind
When looking for bankruptcy as a financial option, knowing the difference between business bankruptcy and personal bankruptcy can help you determine whether any of these is right for your situation. Should you need someone to assist you on the legal processes, you can click here for more information.
- If you think it’s for the best of your situation
Filing for business bankruptcy and admitting your loss is obviously not the easiest decision to make at any point in your life, however, it’s a decision to make for the best of your situation nonetheless. With the right people to guide you along the way, everything will turn out fine eventually. In any way, filing for bankruptcy is not the total end of your career, but it can be a beginning of a new venture that would hopefully be more successful than the one that just ended.
Veronica Ferguson is equipped with more than 20 years of experience as a businesswoman. She is currently writing her next big project and hopes her pieces would impart vital knowledge to her readers. Veronica is a family woman, and is often with her family during her free time.