Filing for bankruptcy can be a difficult decision. However, if you are looking for relief from debt, it could be a viable option. Especially when your small business is coming to an end or running out of business funding, business owners need to understand how to go about doing a bankruptcy filling. If your company is not profitable, you should try to make the bankruptcy process as smooth as possible. In this post, we will outline the steps to filing bankruptcy and pay off creditors for good.
Understand The Types Of Business Debt
The first step to prepare for a bankruptcy filing is to understand the business debt. Not all types of debt get discharged during bankruptcy. That means, you or the business could still be liable for debt owed. Depending on what state the business is located in, certain debts cannot be discharged. For example, business debts like fraudulent loans, delinquent taxes and secured loans are rarely discharged. Take an account of all your business debts to see which ones would get discharged after a bankruptcy filing.
Sign Up For Credit Counseling
Before you can actually submit a bankruptcy filing, US laws mandate that you receive credit counseling. The counseling must be done within 6 months before your file for bankruptcy. Usually, it needs to be done with an approved agency. If you need a credit counseling agency in your area, the United State Turstee’s Office has a list of them available online. Depending on the type of bankruptcy filing you are preparing for, meeting with an approved credit counselor is a required step.
Meet With An Attorney About Filing Bankruptcy
Next, you should meet with a bankruptcy attorney who can advise you on the best type of bankruptcy for your small business. A legal advisor will be able determine if you are eligible for bankruptcy, what is the best strategy and how to fill out all the forms. Before you agree to work with a bankruptcy attorney, make sure you talk to a few different firms. Then, you can decide which attorney aligns with your goals and budget. In order to have a smooth small business bankruptcy filing, you should have a working relationship with the attorneys representing your case.
File The Petition For Bankruptcy
With the help of your attorney, or on your own, you can file the petition for bankruptcy. You will need to fill out many bankruptcy forms and documents. These include schedules, an inventory of assets and other financial information. When submit the petition to bankruptcy court, the filing has been done. Now, you are ready to proceed with the bankruptcy process for your small business.
Working With The Courts And Creditors
Once your business bankruptcy filing has been submitted, you will need to meet with your creditors. During this period, an automatic stay will be issued to creditors so they cannot collect any debts until the process has completed. When you meet with the creditors, a trustee will confirm that you understand the consequences of declaring bankruptcy and fixing business credit. With your attorney present, you will be required to answer questions from the creditors to ensure that there is no abuse of the system. Based on the meeting, creditors can either work out a payment plan, issue an objection or let the process proceed to the court.
Follow these steps, you can successfully file for bankruptcy as a business. You have a number of options and strategies to get the financial relief you and your business need. Start by understanding the business debt that you have. Then, sign up for credit counseling and meet with a bankruptcy lawyer. After deciding the best type of bankruptcy filing, submit the petition to the court. Finally, work with your creditors and the court to complete the bankruptcy process for your small business.