Since the pandemic began in the middle of February, around 800 small businesses had to file for bankruptcy. Continuing to pay rent, utilities, and payroll while making no profit hit many businesses across the U.S. hard.
Filing bankruptcy is seen as the end of the road for most people. However, for a lot of successful businesses, filing for bankruptcy only made them stronger in the end.
What is filing for bankruptcy going to mean for your business? Just keep calm and read on for 5 tips you need to know if you’re planning on filing.
1. Filing Bankruptcy: Hire a Professional
What does filing for bankruptcy do? What is the process for filing for bankruptcy, and what can you expect?
During stressful times, it can be hard to do your own research on top of all the other inconveniences you’re already dealing with. This is why it’s best to hire a bankruptcy attorney to help you from the beginning.
Sure, it’s another cost on top of all the other debt you’re in. However, they’re really good at their jobs, and may even be able to help you get through tough times without actually filing for bankruptcy by eliminating debt in other ways.
2. Types of Bankruptcy
Before you wonder what is the downside of filing for bankruptcy, you should know the different types you can file for. Each business is different, and there are three different types of bankruptcy you can file for depending on your situation.
The first type is chapter 7, which is for businesses that plan to completely shut down and liquidate all assets to pay off debts. Chapter 11 is for businesses that plan to stay open and restructure to pay their debts.
Finally, chapter 13 involves utilizing a court-ordered repayment plan to pay off debts. Having a bankruptcy attorney will help as they can look at your business and decide what type works best.
3. Preparation
Once you decide on what type of bankruptcy is best for your business, you’ll have to go to court. The court will need to see all of your financial records.
This includes your history of income, expense, asset, and debt statements. This will give you and the courts a better understanding of how to move forward.
4. Required Courses
When you file for bankruptcy, you’ll have to attend mandatory programs. Before filing, you’ll need to go to credit counseling for advice on your debts and money management.
After filing, you can take debtor education courses approved by the US Trustee Program. You will then receive the required certificates.
5. Stay Proactive
Filing for bankruptcy isn’t the last step. Stay alert by looking out for other business opportunities.
Take advantage of grants the government is offering because of the pandemic. You can also apply for small business loans for extra help.
Lastly, take a deep breath. Staying calm will be a tremendous help during this process.
Final Thoughts
Filing bankruptcy can be scary. Keep these tips in mind through the process and know that you can get through these tough times.
Be sure to check out our website for more great tips. We have the business and service advice that will make your dealings much easier.
