A business may go into bankruptcy for a number of reasons, such as poor planning, unexpected variables or a lack of evolution. Whatever the reason, it’s important you understand how bankruptcy affects the business, and how a lawyer can help secure the future of your brand.
What Bankruptcy Means For A Business
When a business has to declare bankruptcy, they are usually done via one of two bankruptcy codes. Chapter 11 of the code is the most common way for businesses to file, as it has the goal of remaining in business by reorganizing the business to become profitable again. This will be done via plans to cut costs, innovation of the brand and business practices as well as general forward planning.
This type of bankruptcy enables business to continue trading and offer services, usually without any interruption to workers and customers. A debt repayment plan will be created with the help of an attorney and the courts.
A Chapter 7 bankruptcy will be used for a business that has little or no assets. This type of bankruptcy enables businesses to dispose any unsecured debts they may have accrued, usually this is to creditors for business expenses or credit cards. Any business or individual filing via this bankruptcy will sell off as many assets as needed in order to clear the debt.
How Law Firms Can Help
Whilst you don’t legally need a lawyer to file bankruptcy for you, it is generally a good idea to seek assistance. This is because of the complicated procedures that are involved, and how important it is to get it right. It’s worth protecting your interests and rights as a debtor, without furthering worsening your position.
Your bankruptcy attorney will work with you in different ways, depending on the nature of your bankruptcy. In most cases, they will work to lower the debt, sometimes even erasing it, so that it is able to be repaid in smaller chunks. Those who are owed will rather get some money, than none, so usually will arrange a deal of sorts.
For consumer bankruptcy, it is likely that you’ll mainly lose some assets. Whereas with commercial bankruptcy, it will be aspects of your business you will lose. A bankruptcy attorney, such as Austin based Farmer Law PC, are specialized in figuring out what works for your business. They offer comprehensive expert legal services for businesses in a wide range of activities and industries.
Recovering From Bankruptcy
Through your bankruptcy, you will have had a plan put in place to stop losing money in the short term, such as selling off costly assets. For the long-term, there will be plans to see income return to the business. Aside from that, it’s important to learn from the mistakes that led to the bankruptcy in the first place.
It’s likely that your credit score will have taken a hit, but that doesn’t mean it’s the end for your business. Credit scores are designed to change based on any positive or negative effect attributed to them. If you start paying off debts in a regular manor, and can afford to pay for some credit, then your score will reflect more positively.
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