Ganje Law Office

Corporate Bankruptcy: When Should a Business File for Bankruptcy?

When your company is facing money problems, it can be hard to know when to file for bankruptcy. Consulting with an experienced bankruptcy lawyer can help you determine if your business must file for Chapter 11 or Chapter 7 bankruptcy.

In the current economic climate, more and more businesses are suffering from increased financial stress. When your debts are piling up, it can be hard to decide if or when to file for bankruptcy protection. Here is a brief overview of the issues surrounding bankruptcy, but you should always consult with a professional bankruptcy attorney prior to making any decisions regarding a bankruptcy filing.

The simple answer is, try every other solution before filing for bankruptcy. Even if your company is overwhelmed by debts and creditors, there may be non-judicial resolutions available. Financial restructuring and workouts can help you satisfy your debtors without having to file for bankruptcy. In fact, simply letting your creditors know you’re considering bankruptcy may be incentive enough for them to come to the bargaining table! These types of bankruptcy prevention strategies create a compromise solution between your company your business debtors. The end result is a negotiated partial repayment whereas a bankruptcy would likely result in the creditor getting nothing. Workouts and debt restructuring are a way of resolving your debts without the hassle, cost, or embarrassment of filing bankruptcy.

For small business owners, a business bankruptcy can also impact your personal finances. In partnerships and sole proprietorships, you can be held personally liable for your company’s debts, and your assets can be used to satisfy your creditors. Obviously, in these cases, you’ll want to seek every possible alternative to bankruptcy in order to safeguard your personal property. Additionally, filing for bankruptcy will likely make it harder to start a new business in the future. Not only will you have depleted assets, but the social and financial stigma of bankruptcy may also be a problem for you.

However, if your debt problems can’t be resolved any other way, bankruptcy protection may be your only option. Depending on your company’s structure, there are a number of different options available for corporate bankruptcy. In order to determine the most appropriate type of bankruptcy for your business, you’ll need to consult an experienced bankruptcy attorney. In fact, if your debts are mounting, you may want to speak with a bankruptcy lawyer before the situation becomes truly dire. He or she may be able to help get your company turned around from the brink of disaster with knowledgeable advice and guidance.

If you’re considering business bankruptcy, take control of your circumstances by contacting a bankruptcy professional today!

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