Business bankruptcy is a situation in which a business organization has more liabilities than assets and is no longer capable of meeting its financial obligations. Any type of business can file for business bankruptcy.
Business bankruptcy can provide relief to the business owners who are overwhelmed with credit problems and cannot find any other way out of debt. However, business owners must also face the fact of losing one’s business and damaging one’s credit standing and endure embarrassment is a possibility. There is not much stigma attached to Business Bankruptcy because it is, in fact, used by many businesses to restructure their companies.
Though Business Bankruptcy may seem different from personal bankruptcy, they both target the same goal: a way out when all possible solutions fail to alleviate the current situation.
When a business or a company is on the verge of forfeiting payments on a debt, it is the sign for an owner or manager to know that the time has come to file for business bankruptcy.
Are there any differences between the different business bankruptcy types?
There are 2 main types of business bankruptcy: chapter 7 and chapter 13, but the latter has more advantages than the former because it is federal bankruptcy, and the law does not require the liquidation of the business itself. As an alternative, the company will have to fulfill paying the debt according to the agreement with the creditors. The company has the chance to recover from the debts and can make profits again. But any decision-making has to be pre- approved by the federal court as the business bankruptcy law stipulates.
Brandon O'Brien is the current manager of a company that filed for bankruptcy after following our professional advice and is currently following making his compulsory payments. Business bankruptcy has helped him regain the company’s financial control and has given him a new way of dealing with the debt problems the company has carried for many years and has not yet solved them.
Brandon O'Brien:
What should I do after filing for Chapter 11 Business Bankruptcy?
James Banks:
Chapter 11 Business Bankruptcy allows the company to keep its assets. Nevertheless it is recommended some bonds be liquidated in order to pay off part of the debt. The amount can be reduced, and the payment will not be too high; allowing the company to generate profit after all. Regardless of what method you use to reduce the debt, the manager of the company has to regularly report to the federal court any decision made in the company.
Brandon O'Brien:
So, after filing for Business Bankruptcy, do the lawyers take care of everything?
James Banks:
Do not believe that by filing for Business Bankruptcy your financial situation will be resolved. You, as the manager will have to make sure that the company has enough cash to endure the whole filing process, and we recommend that you follow a plan in order to avoid any type of delay during the case.
One way to take care of creditors once and for all is to put them all together and set up a plan to start the repayment process. The debt will be reduced, and the creditors will see you are in the process of paying them. This creates trust and understanding as to why you file for bankruptcy.
Remember, filing for Business Bankruptcy is a serious decision, and one that should only be considered when all other options have been tried. It would be wise to seek advice from a financial and legal professional before making any sudden decisions.
We have different articles of interesting topics and current and former clients’ experiences with our programs. Take a look at topics related to Business Bankruptcy, situations in which people can fall into and how to keep yourself a debt free person.
http://www.commercialdebtcounseling.com/avoidbankruptcy.shtml
http://www.commercialdebtcounseling.com/...business-y/business-business-bankruptcy-filing-laws.shtml
Related Articles
Bitten By Bankruptcy?
By: Yannis Loucopoulos | 07/08/2006 | Debt Consolidation
Are you not able to pay your debts as they fall due? Are you considering yourself to declare bankrupt to cope with your debts? This article may help you.
Business Bankruptcy: The Cold Hard Facts
By: Kevin Muir | 18/01/2007 | Management
Will this year spell financial disaster for your going business? This article gives tips on how to save your company from business bankruptcy.
Business Bankruptcy: How A Lawyer Can Ruin Your Troubled Business
By: Kevin Muir | 29/01/2007 | Management
If your company is in financial trouble, think twice about declaring business bankruptcy. Find out how a bankruptcy lawyer can be detrimental to both your personal wealth and that of your troubled business.
Bankruptcy LLC Explained
By: Kevin Muir | 08/02/2007 | Management
Since Limited Liability Corporations (LLC) are a relatively new type of business entity, LLC owners have some difficulty finding out how courts will treat their bankruptcy LLC cases. This article gives some key points on how the courts view Limited Liability Corporations.
Business Bankruptcy Not Always Best Option
By: Kevin Muir | 09/02/2007 | Management
When a company is in dire straits, often a business bankruptcy seems enticing. Your debt will disappear, and, if the company has filed under Chapter 11 bankruptcy, the "fresh start" offered by the reorganization is hard to pass up. But business bankruptcy is not all it's cracked up to be.
Business Bankruptcy - Business Bankruptcy; is the Best Option Chapter 11 or Chapter 13
By: Debbie White | 23/04/2007 | Business
When your business begins to experience serious business debt problems and the overall debt is accumulating far faster than the business assets, you may want to consider the protection afforded by filing for bankruptcy.
New York Bankruptcy - Repay Debts Under Court Protection
By: James Arther | 01/10/2007 | Finance
New York bankruptcy, relates to cases of bankruptcy reported from New York City and how such cases are being dealt by US federal courts under chapter 7,9,11,12and 13 of bankruptcy code.
Corporate Bankruptcy - Reorganize Debts, Avoid Bankruptcy
By: James Arther | 17/01/2008 | Personal Finance
Corporate bankruptcy relates to laws dealing with bankruptcy cases of companies, or partnership firms. When any company files protection under bankruptcy laws, they prefer filing under chapter7 or chapter 11 of bankruptcy code.
Got a Question? Ask.
Ask the community a question about this article:
Q&A Powered by:
Latest Finance Articles
Stock Market Volatility Helps In Making Money Using Stocks
By: Amit Kheterpal | 05/09/2008
Anyone who has ever ventured into the stock market would have gotten to know by now that the index can go up and down on any given date. That gyration can actually help you make good returns on the stock market.
Tips On How To Diversify Your Risk In The Stock Market
By: Amit Kheterpal | 05/09/2008
Stock market is not for the faint hearted they say. That is definitely correct and a lot of people who join the stock market bandwagon hearing stories about loads of money to be made usually are the ones who burn their fingers in the stock market very easily.
Making the Most of Your Business Banking Relationship
By: Ann Knapp | 05/09/2008
Anyone who owns a business can appreciate the need for a bank account to handle bill paying, deposits and payroll. But banks can assist business owners in so many other ways as well. In fact, having a reliable financial partner can help a business reach its greatest potential, as well as provide support during times of financial need.
10 Sound Budgeting Tips to Ensure Financial Freedom
By: Michael New Jr. | 05/09/2008
Here are 10 sound budgeting tips that will surely get you on the right track again. If you're in trouble with debt, this article is a must read!
Limited Liability Corporation: Do One And Save Your Wealth!
By: Ramapati Singhania | 05/09/2008
Limited Liability Corporation: One of the newest but BEST forms of incorporation
How Does Shared Ownership Housing Work?
By: Peter Kenny | 05/09/2008
Over recent months the mortgage market has fallen into a sharp decline as a result of the global credit crunch that swept across the nation last summer and has been wreaking havoc in the financial markets ever since
How to Improve Your Income and Cash Flow
By: Brad Griffin | 05/09/2008
You cannot have a successful business person without a suitable cash flow. If this secret is so well known, why are so many struggling businesses? When running the daily operations of a business money, or cash flow is a big challenge. I will present you 7 tips to help you improve your income and cash flow.
Pasadena, TX Auto Insurance
By: Russell Neal | 05/09/2008
Insurance carriers use what is called a community rating system to determine base insurance rates in a particular zip code based on the number of collisions and claims that occur per annum within that zip code. Even though Houston has a great many vehicle collisions, Pasadena, Texas auto insurance tends...
More from James Banks
Securing a Bad Credit Loan for your Small Business
By: James Banks | 13/11/2007 | Business
In the past, people who dream of having their own small businesses often see the realization of this dream of theirs hampered by the fact that they have bad credit scores. Their bad credit ratings prevent them from qualifying for a loan that would have helped them start up the small business that they wanted.
For your Business Debt: Consolidation or Settlement?
By: James Banks | 13/11/2007 | Business
Risk is something you always have to deal with if you are running your own business. Because a business is dependent on the prevailing economic conditions of the country, no matter how big or small it is, when the economy takes a dip, it only follows that businesses will have a hard time operating. At times, it cannot be helped for a business to incur debts along the way.
Company Debt - Avoid Bankruptcy and Save your Company From Debt
By: James Banks | 06/06/2007 | Finance
Bankruptcy may be a relief, but it can hurt far more than you think. Filing for Chapter 11 protection may take some of the burden of your company’s debt off your shoulders, but it is very damaging in the long run. Your reputation as a money manager is compromised, and so is your creditability. Should you have the need to take out another loan or to ask for credit, your potential creditor will only need to glance at your record to see that you have once filed for Chapter 11 protection. After
Commercial Debt- Save your Business From Commercial Debt
By: James Banks | 06/06/2007 | Finance
It takes money to build and run a business. An astute businessman would make sure that he has enough cash to keep his business in operation. If he does not have enough cash at hand, it is not uncommon for him to resort to taking loans from commercial banks or suspending payments to his suppliers. This gets the business into debt.
Business Debt - Some Facts About Business Debts
By: James Banks | 02/06/2007 | Debt Consolidation
Business debt is something which can make a situation tougher, as it can get the businessmen in a critical situation. The businessmen may undergo some loss in the business, as they can face some problems in business. Just because of this reason they might not be able to pay off the debts. On the other hand, the miss payment of the debt can result in paying more tax, more penalties and many other hidden costs.
Debt Settlement Usa – Go for Debt Settlement in the Usa and Stop Swimming in Debt
By: James Banks | 02/06/2007 | Debt Consolidation
If you are a debtor in the USA and if you are thinking of going into debt settlement, you should go for it and remember that you are not alone in your plight. Your situation is not unique; you would be surprised just how much of your fellow residents in the USA share your situation. Moreover, there are other people who are willing and capable of getting you out of the mess you are in by assisting you in every step of the debt settlement process.
Debt Settlement Debt Negotiation - How Do I Find Good Debt Settlement Debt Negotiation?
By: James Banks | 02/06/2007 | Debt Consolidation
When you are in a difficult financial situation is it all too easy to take the first Debt Settlement Debt Negotiation agreement that comes along, however it really does pay to shop around and make sure you have a good knowledge of what is available so you can then make an informed decision on which company to work with. There are many Debt Settlement Debt Negotiation companies out there so shop around!
Debt Settlement Companies - How Do I Choose a Good Debt Settlement Company?
By: James Banks | 02/06/2007 | Debt Consolidation
The best thing to do when considering Debt Settlement Companies is to shop around and find out about the different companies who are in the market. By doing this you can ensure that you are happy with the company and their terms and conditions. Remember you will be dealing with the Debt Settlement Company for some time so you need to get it right.
Finance 
