When flipping through the channels on the television set you can't help from hearing news on how bad the economy is. At the last Fed meeting, Bernanke stressed the possibility of inflation in the near future. To a business owner this means the cost of doing business is going up. Depending on what sector of business you are in, many times it's hard to raise prices to cover the costs and still be competitive. Many times you look at the bottom line of your business and find out that you're facing financial trouble. Facing the idea of filing bankruptcy to save the business might not be in the spectrum of ideas that you're willing to do. Looking back on how people use credit, the reasoning of living on a cash only system is not such a bad idea. Usually, businesses go into debt with the idea of expanding and growing quicker. Getting new computers, a bigger fancier office, or hiring more employees, doesn't necessarily mean that it will increase your profits. That's why it's important for businesses, before they go into debt, to make sure that they can afford the debt even if the added purchases don't pan out into increased revenue. If you can't afford it, it's probably best to wait and see how things go.
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Running a business that is in financial trouble is no walk in the park. Before filing bankruptcy, it's a good idea for the owner to come up with creative answers to generate cash flow and keep the doors open. Sometimes, you can generate quick cash by selling part of the company. Another alternative would be to liquidate merchandise or downsize by possibly laying off employees, or closing a location. Exploring all options can sometimes stop a pending financial disaster before it becomes a reality. Keeping thorough financial records can help a business owner foresee problems that might arise. Copying the expertise of a similar business or joining forces with a similar business can sometimes save money by increasing buying power. It is true that just because many businesses recover from a bankruptcy filing,it still should be avoided at all costs.
When bankruptcy can't be avoided, a business owner should consult a bankruptcy attorney to get an understanding on the different chapters of bankruptcy and what they accomplish. A Chapter 7 bankruptcy is the last call when a business has no future, assets and the debts are completely unmanageable. Chapter 13 bankruptcy is for individuals and sole proprietors. This chapter sets up a repayment plan that is managed by the bankruptcy trustee and agreed upon by the creditors and the debtor. Paying off as many debts as possible will help keep a good relationship with creditors and vendors if you want to continue using them. Chapter 11 was created to be used by corporations and sole proprietors. A Chapter 11 bankruptcy is called a reorganization bankruptcy and is similar to a Chapter 13 but allows corporations to file also. Proper planning and research will aid in having a successful small business bankruptcy filing.
The way you run your business after filing bankruptcy can be like coming to a fork in the road, you can choose the path that leads you to a prosperous future by learning from your mistakes, or you can repeat the mistakes that got you into trouble in the first place. Look at the needs of your business on a priority basis and always keep your debt in line with your revenues. However, there are things that happen and can't be controlled and bankruptcy can be the way to get back on your path to profit.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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