Declaring bankruptcy can be a stressful time for anyone – but it might be a decision you need to make. When you’ve made this decision then there are a few things that you need to consider, such as getting yourself a good lawyer (for example, you could check out something like this Harnett County bankruptcy filings for more information).
However, these are all things that we will talk about later on in this article. Nobody wants to admit they have failed, but bankruptcy can have some positive advantages for your personal finances and future career. If you’ve been putting off that final decision to close things down – you’re in the right place.
In this article, we’re going to look at a few things to remember when you finally decide to declare your business bankrupt.
2. Work out which type of Bankruptcy is Right for You
There are a few different types of bankruptcy declarations – most notably Chapter 7 and Chapter 11. Before actually deciding to file, you need to take a deeper look at which of these makes the most sense for you. Chapter 7 is generally referred to as liquidation and is the most common form – it’s probably the one you’re going to look at first.
However, there are a few other options for you and your business. Chapter 11 refers to the reorganization of the business and allows for more negotiation with debtors after the initial filing. The more common Chapter 7 will come down to your assets being sold off en-masse to pay people you owe. You can find out more about this in the following article.
2. Have a Look at Bankruptcy Alternatives
While you might think filing for bankruptcy is the only option – it often isn’t. Make sure you’ve evaluated all the options that are available to you before you decide to file. These options could include negotiating terms with creditors to either cancel a debt or change the payment plan. Creditors will often not want your business to fail as it could make it even harder for them to get their money (especially if they’re at the back of the queue) – so many of them might be more willing to give you some leeway than you think.
You might also be able to sell assets or property without closing your business. If you can help yourself by raising some extra short-term cash while still functioning as a viable company, you might be able to fix things in the medium to long term. Check out this link for the process in full.
Furthermore, if you are based in England, Wales, or Northern Ireland, you may be able to apply for an IVA plan. An IVA (individual voluntary arrangement) is a legal method you can use to pay your debts back to your creditors over a certain period. This usually lasts for five years. An IVA gives you the flexibility and affordability to pay all your debts under one management plan, using legal means to reduce your debts.
3. Check your Eligibility
You’ll have to pass a means test to qualify for Chapter 7 bankruptcy. You’ll need to check whether your average income is low enough compared to the state median. If your income is too high, you might need to pass a test that checks whether you’ve got enough disposable income to pay creditors yourself.
4. Get a Good Lawyer
One thing that’s going to help you a lot with your bankruptcy filing is a high-quality lawyer. Make sure you’ve got one – it could have a huge impact on your finances. If you are still unsure about the importance of a top, lawyer and what they can bring to your proceedings, visit financegab.com to learn more.
5. Get your Paperwork in Order
You’ll need to have all sorts of supporting documents before you file, to show income, outgoings, debts, and assets. Make sure you’ve got everything to hand and well filed before you start proceedings. If you’re planning on handling everything yourself, you’ll want to fully understand how to file bankruptcy without a lawyer.
6. Attend the Right Counselling
You’ll need to consult with a counseling agency before declaring bankruptcy to make sure it’s the right option for you. There might even be other counseling commitments like personal financial management to attend.
Bankruptcy can be a difficult time – and that’s why you must check all your options fully. Hopefully, these steps have been enough to get you started.
