Running a business is not easy. A business owner often has to sacrifice a lot of time, energy, and money into it. However, no matter how hard you work, there will always be a risk of failure.
It is tough when you see the business that you have built from the ground up to suffer financially. If you are considering filing for bankruptcy, here are some things you need to do first.
Seek an Expert’s Advice
Filing for bankruptcy is a legal process. You, therefore, need to consult a lawyer to help you navigate the legal process.
However, there is one more thing that your lawyer can give you: a piece of educated advice. Talking to an experienced bankruptcy lawyer, you can find one across the United States to tell you what other options you have. Perhaps, filing for bankruptcy is not the only way out of your current financial difficulties.
At the end of the day, the decision to file for bankruptcy will be yours, but consulting an expert about your situation will ensure that you are doing the right thing.
Debt.com encourages business owners to talk to at least three bankruptcy lawyers. Each one may give you a different opinion on how you should proceed. It will also allow you to evaluate bankruptcy lawyers so you can choose which one you should hire.
Think Things Through a Hundred-Fold
The one thing that you should never do is panic. The debt that you have incurred may seem insurmountable right now, but that does not mean it is impossible to pay off. Maybe you and your employees only need to look at your current processes, suppliers and manufacturers, and your current business model to find areas where you are bleeding money out. Cutting off facets of your business that requires money but does not reel in profit could solve your financial issues.
Filing for bankruptcy as soon as you experience difficulties will not prevent more problems from surfacing later on. Give yourself some time to think things through and consider the advice of your lawyers before taking action.
Are Your Personal Assets in Danger?
If your assets are protected, there is no reason for you to file for bankruptcy. You can let go of your business and start all over again somewhere. However, if your savings and properties have been implicated into the business’ liabilities, that is when you may need to file for bankruptcy.
There are many ways that your personal assets may be seized to pay for what your business owes. If you intermix your personal assets with your business’ finances, you may be personally liable for the debts of your business. If you have signed a personal guarantee to secure a loan, you may lose your savings and your properties.
There is No Other Option
After you have weighed down the advice you have received from your lawyers but you still think that there is no other way out, then go for it. Just remember that you cannot file for bankruptcy over and over again. You need to wait for years before you can file again. If you are filing for Chapter 7 bankruptcy, you will not be able to file again for eight years.
Filing for bankruptcy is no joke nor is it your only option. Whatever your situation may be, make sure that you have thought things through thoroughly.