Quick Rundown of Business Bankruptcy

If your business is struggling with sluggish sales, high overhead and other financial challenges that are causing you stress, you may wonder if you should file for bankruptcy. Bankruptcy is a viable and even recommended option that may be suitable for some companies, but it is not the only option available. Whether you are just starting to research bankruptcy as an option or you have seriously been considering the possibility, you should be aware of a few key points.

Understand the Types of Debts That You are Responsible For

Before you spend time researching bankruptcy any further, make a list of the business debts that you are responsible for. These may include business loans, credit card debts, debts to third party vendors, taxes and more. Some debts, such as outstanding taxes due, may not be included in a bankruptcy. If the majority of your financial stress is from credit card debt, bankruptcy may be a more suitable option than if your financial challenges are related to unpaid taxes.

Consider Restructuring Debt

Restructuring debts by working with your creditors may be a viable option. A restructured debt plan may provide you with reduced interest charges, a longer term length or other improved terms that may allow you to more easily pay your debts over time. Some creditors may also agree to reduce the amount of debt owed.

Talk to an Accountant

Before you finalize your plans to file for bankruptcy, you should work with an accountant or financial specialist. The accountant may have creative solutions that can help you to better manage your debts, collect outstanding accounts receivable and otherwise improve your company's financial standing. A professional business accountant may even have a keen business eye that can be used to identify problems with your business operations, such as carrying more inventory than needed. Making a few adjustments may improve your financial standing.

Review Your Options with a Lawyer

Bankruptcy generally should be considered to be the last option because it can have a negative, long-term impact on your credit rating, and this can make it difficult to run your business in the future. There may be other options available in lieu of bankruptcy, such as debt consolidation, credit counseling and others. In addition, a law firm like Faber Inc. may also help you to determine if you qualify for filing for bankruptcy, and professional lawyers can begin the process for you.

Bankruptcy may not always provide the full amount of debt relief that you may believe it might, and there may be other options available. However, when you speak with a lawyer about your options, the lawyer will answer your questions and may recommend alternatives if another option is more suitable for your situation.