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10 Important things you need to know about bankruptcy right now

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Being financially literate is an invaluable skill that is helpful for a lifetime. As a business woman, you can never be too informed. Knowing what takes part in certain ‘what if’ situations is a great way to ensure fail safes. This is why, while filing for bankruptcy might not be at the forefront of your to-do list, it’s key to be informed of the procedures in place for anyone that has to go through it. It’s becoming more and more commonplace each day as people take on more debt than they can handle and the interest adds up over time.

Without further ado, here are ten important things you should know about bankruptcy.

If you own a small-scale business and find it crumbling under the pressure of its varied financial obligations, you may consider Chapter 11 bankruptcy. This will help your business deal with debt.

Typically, when a business files for bankruptcy, it has two options: It can either file for Chapter 7 or Chapter 11 bankruptcy. In the former, the business is liquidated and all its assets are sold off to cover the company’s debt. However, in the latter, the business may continue to operate long enough to reimagine a future-forward strategy.

In most cases, businesses that file a Chapter 11 bankruptcy come out of it with improved financial help. If you are struggling to keep your business afloat, you can get in touch with a reputed agency, such as Benenati Law Firm, to file Chapter 11 bankruptcy.

Here, we will look at the many benefits of filing Chapter 11 bankruptcy instead of closing down altogether.

  1. Keeping Business Running During The Bankruptcy Procedure

Unlike Chapter 7 bankruptcy, Chapter 11 allows you to keep your business running, even during the bankruptcy filing process. When you have worked hard to establish a company, you wouldn’t want it to shut down. Besides, a continued business ensures that you don’t lose your privileged customers and market goodwill.

2. The Automatic Stay Of All Creditor Actions

This is the greatest benefit of Chapter 11 bankruptcy. It prevents all creditors from contacting your business to demand debt payment or seizing your assets. And, if any creditor continues to demand payment, the court could charge him for a penalty.

This automatic stay of all creditor actions enables the business owners to get some breathing room from aggressive debt collectors. They can get time to evaluate their current financial situation and devise strategies to get out of it. They can prepare a company reorganization plan to make their business venture profitable again.

3. Possibility Of Obtaining Loans At Favorable Rates

Apart from authorization to run regular business operations, the company can also seek court authorization for financing. This can help businesses secure additional funds to meet the on-going expenditures.

Generally, businesses in Chapter 11 bankruptcy can seek debtor-in-possession financing. This gives the lender a preferential position to enjoy priority over pre-petition liabilities and debts. This provides complete assurance to the lenders that their money will be paid in full, even in the worst-case scenario. Alternatively, companies can obtain the much-needed finance to kick-start regular operations. Benenati Law Firm can help you secure loans at highly affordable rates.

4. Sell Assets Free Of Any Interests And Liens

As a part of company restructuring, a business may choose to sell assets that it no longer needs to generate cash. If these assets are bound by liens, selling them outside of bankruptcy could be very difficult. You would need to spend money clearing all encumbrances on the property.

However, with Chapter 11 bankruptcy, companies can seek court approval to sell assets free of liens or encumbrances. This can help to ease financial pressures.

If your business is considering Chapter 11 bankruptcy, you must contact a good law agency. They will guide you on whether or not to pursue the bankruptcy process.

5. When filing for bankruptcy, honesty is the best policy

You don’t want to make the mistake of lying on your statements, or in the court where they’ll scrutinize your financial endeavors and decisions.

6. Some types of debt can’t be discharged

Filing for bankruptcy does not magically fix your entire financial situation. Some types of debt, like student loans, back taxes, or child support cannot be discharged by simply filing for bankruptcy.

7. Your filings become public

This is especially scrutinizing if you prefer not to divulge your finances with friends or family. This means anyone who chooses to do so can look up your financial information.

8. Filing for bankruptcy will require additional spending

This means spending on lawyers’ fees, filings, and procedures in the processing of your filing

9. Your credit cards are not really your own

Court officials will confiscate any credit cards you may have and can dictate what you may or may not spend money on.

10. Filing for bankruptcy isn’t an automatic fix

There are long lasting effects of choosing to file for bankruptcy that can impact the decisions and purchases you’ll be able to make in the future.

Filing for bankruptcy might be your only option when it comes to landing in dire financial debt. Being well informed on the subject beforehand can help in not making rash decisions that might eventually land you in unsurmountable debt in the first place. Learning about bankruptcy is always a good reminder to pay all bills on time, take on the debt that you know you’ll be able to easily pay back, and not overreach your means.

About Business Woman Media

Our women don’t want to settle for anything but the best. They understand that success is a journey involving personal growth, savvy optimism and the tenacity to be the best. We believe in pragmatism, having fun, hard-work and sharing inspiration. LinkedIn

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