Businesses work hard to avoid bankruptcy, but it’s a reality many business owners have to face. If you feel there’s no other route for you but bankruptcy, then pause for a moment. The following are a few things you should know before you file.
Look for Legal Help
The first thing you want to do is find a good lawyer. Many law firms use clever bankruptcy lawyer marketing techniques to generate business, so do your research before deciding who to hire. As they say, “The choice of a lawyer is an important one and should not be based solely on advertisement.” You want someone on your side who understands what your business is going through and understands bankruptcy. You can try to do all of this on your own, but the chances of making errors are high. This is not a time to make mistakes, so just keep that in mind.
Is it Necessary?
Once you’ve hired a lawyer, you can move on to the next step, which is finding out if the filing is even necessary. Your lawyer can look over your situation and see if it’s something you can avoid or something you have to face. A good bankruptcy lawyer might be able to reach out to your creditors and work out a deal on your behalf. The deal might not be great, but it might prevent bankruptcy.
Are You Closing the Business?
A big question you’ll have to answer before you file is if you want to save your business or not. There are a few bankruptcy options, and the way you answer this question determines the options your lawyer presents to you. Decide if there’s a way to dig yourself out of this hole, or are you done with this endeavor? Figure out if the business can still be profitable in the future. Answer these questions honestly before you move on.
Consider the Budget
Filing is expensive, and things get even more costly if you’re thinking of keeping your business going. It’s important to talk candidly with your lawyer about all of your expenses and any immediate financial issues, like if you’re facing foreclosure. The lawyer you hire needs to fit into your budget. If this doesn’t happen, you might deal with more financial stress than needed. The right lawyer should help you work out a plan that’ll benefit everyone.
If you are thinking of keeping your business going, then accept that you won’t have control over your business as you usually would. When you file for bankruptcy, you’re letting the courts control your business. Many of the decisions you could make on your own will have to go through the courts. Some business owners have a hard time accepting this because they’re used to being their own boss, so this feels alien. Be sure you’re ready for a change like this one.
The Privacy Issue
As business owners, you’re entitled to your privacy. That’s no longer the case if you file. The courts, your creditors, and other people can see everything you do. The way you conduct your business, the mistakes you’ve made, and any additional detail in your business dealings will be reviewed by strangers. Sometimes, you’ll be questioned about decisions you made, and that’s going to feel strange. Be sure that you’re ready to go through this.
Now, you have some things to keep in mind as you consider filing for bankruptcy. If you feel confident about this step, then go ahead and take it.