Frequently Asked Questions About Business Bankruptcy
Being a successful business owner requires the ability to anticipate potential problems and uncover solutions to address them. If your business is struggling financially, filing for bankruptcy might be your best option. However, questions you have about the process and the potential impact it could have may be holding you back from taking this important step. As experienced New York business bankruptcy attorneys, we answer some of the most frequently asked questions we hear from our clients:
Should I Use Bankruptcy As A ‘Last Resort’?
Filing for bankruptcy should not be considered as a last resort or any type of admission of failure in your business. According to Statista, more than 22,000 businesses file for bankruptcy each year. It was designed as a way of providing business owners with some much-needed relief and allows them to make a fresh start.
Rather than putting it off until things get worse, business bankruptcy should be considered long before serious financial problems begin to pile up. It can help to protect important relationships with suppliers, prevent you from having property and equipment seized, and eliminate the need for further legal actions or having court judgments issued against you.
What Type Of Business Bankruptcy Should I File?
There are two primary options in terms of business bankruptcy through the U.S. Courts that can help business owners, depending on the particular situation they are in:
- Chapter 7 bankruptcy: Known as a liquidation of assets, this type of bankruptcy can allow you to wind up financial matters efficiently if closing your business is the best option, helping you to avoid further liability and collections actions.
- Chapter 11 bankruptcy: This is a restructuring of your assets, allowing you to maintain important relationships with suppliers and others you rely on. It eliminates certain types of debts and allows you to renegotiate payment plans on others.
Can All Of My Debts Be Eliminated Through Bankruptcy?
Bankruptcy can help to reduce or even eliminate certain types of unsecured debts, such as past-due utilities, outstanding credit card balances, and signature loans. With secured debts, payment plans can generally be negotiated, at lower rates and under terms that are much easier for your business to handle.
How Will Filing A Business Bankruptcy Impact My Future Prospects?
Filing for bankruptcy is just one of many important decisions a business may have to make and it shows both foresight and fortitude on your part. It is a common practice that generally does not carry any stigma and is unlikely to have any adverse impacts on your future prospects. If you file Chapter 7 bankruptcy and close your business, you do need to take care to differentiate your new venture to avoid the appearance of bankruptcy fraud.
Contact Us Today for Professional Help
Do you have questions about business bankruptcy and whether it may be the best option for you? Reach out to the Law Office of Harry D. Lewis. To request a confidential, no-obligation consultation, call or contact our New York City business bankruptcy attorney online today.