Solvency is a primary goal for everyone who ventures into business or active employment. When you realize that you are no longer in control of your cash flow and are really struggling to pay your creditors, then your business could be registering losses. Although businesses have times when they really struggle, failing to realize when your business is in real trouble can lead to serious consequences.
So if you reach a point where you can no longer make enough money to cover your business or personal expenses, it's advisable to file for bankruptcy. However, it's advisable to consult with a bankruptcy attorney to help you do it correctly. Here are three reasons why you should consider it.
You Get the Creditors Off Your Back
One of the most stressful things about insolvency is that your debtors will always be on your back, demanding that you repay them what you owe them. This can be extremely stressful, especially if they start reaching out to your family members and guarantors. When your application to file for bankruptcy is approved, you get an automatic stay against all of your creditors.
The stay means that they cannot take and auction your personal items, call you demanding their money, sue you, or even list your home for foreclosure. When you file for bankruptcy in time, you save yourself from complete loss of property.
You Discharge Your Responsibility to Pay Some Debts
The second benefit you get when you successfully file for bankruptcy is that you will be allowed to cancel your responsibility to pay some debts. Some of the debts you may be allowed to discharge are credit card debt, utility bills, and personal loans.
When these debts have been taken off your record, you can proceed with the financial management classes, and when the time comes, rebuild your finances. The best part is that bankruptcy only stays in your record for a specified period and then your credit score improves.
You Get Permission to Keep Some of Your Property
During the bankruptcy hearing, the judge will look at your assets and compare them to the debt. In this case, your bankruptcy attorney will come up with a plan to repay the money you owe and persuade the judge to allow you to keep some of your property. The repayment plan might include selling some of your business assets. This is an opportunity to ask for some of your property to be exempted.
So when filing for bankruptcy, hire a bankruptcy lawyer to help you do it in an organized way. With the guidance of a good lawyer, you can pause, examine your finances, and start over.
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