If you are about to close down your business because of enormous debt, it is not advisable to do so before speaking to a bankruptcy attorney. This is because they can recommend different strategies to save your business, including declaring bankruptcy. Doing so might offer you the relief you need and enable you to resolve your issue without closing down your company. Read on to understand how declaring bankruptcy can be a lifeline for your business and how a legal advisor can help you.
How Declaring Bankruptcy Can Save Your Troubled Company
One of the major benefits of declaring bankruptcy is that it bars creditors from taking legal action against you for failing to pay back debts. This will give you time to reorganize yourself and repay your debts. For instance, chapter 11 will compel your creditors to modify the terms of the debts owed to them. This will enable your business to remain operational as you pay back your debts in more affordable and manageable installments.
Your legal advisor may also recommend that you file for chapter 13. While similar to chapter 11, this one is simpler and less costly. Under chapter 13, you can reorganize your finances and discuss debt repayment terms with your creditors. This chapter can also discharge some of your debts.
If these bankruptcy options are not best suited to solving your financial issues, your legal advisor may recommend that you file chapter 7. In this chapter, the court can sell your company assets and use the proceeds to clear your pressing debts. Your attorney may recommend this chapter only after the other options seem ineffective.
How Your Legal Advisor Can Help You
A successful bankruptcy application should compel creditors to halt debt collection plans. This will enable you to create a repayment plan and negotiate how to repay what you owe without worrying about impending lawsuits. However, this is only possible if you declare bankruptcy before your creditors get the court's approval to acquire your assets. Because of this, the importance of working with a lawyer when declaring bankruptcy can't be overstated. They will take the necessary legal steps to prevent issues that might delay the process. This way, you can get a court order to enable you to negotiate with debtors before they take legal action against your company.
If you've been contemplating closing down your business because of overwhelming debt, you now have reasons to reconsider. Instead, consider contacting a bankruptcy attorney for assistance. They will identify the best solution for your company and help implement a plan that will help resolve your debt issues.