Filing for Bankruptcy indeed is one of the more challenging financial decisions any individual would have to take in his life. It may seem like bankruptcy is a way to bail people out of debts, but the fine print of this event needs to be understood carefully. And while this seems to be a storm that can only take people along with it, a lot of small businesses are also forced to shut shop.
In the last 1 year alone, more than 65% of small businesses declared small business bankruptcy. This cannot be a mere coincidence. Of course, a lot of analysts point this disturbing trend towards the economic downturn and rising inflation, but the reality is far from different.
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Small business bankruptcy happens when small businesses face a serious cash crunch. Their debts pile up on them, and they do not have enough revenues to bail them out of trouble. This, by the way, can happen to the best, but in case of small businesses, mismanagement of resources and working on a bad financial model gets them to this mess.
For example, a company may decide to take a loan of $100,000 to process cloth material in their small shop. Good idea, but what if the clothes do not sell in the market after they have been manufactured! The distributor or the borrower in this case would be in a severe strain to pay back the dues to the bank.
When things go out of his hand, he would declare it a day. He would file Chapter 11 or any other relevant chapter of small business bankruptcy. In fact, even before he does so, he would need to consult with bankruptcy attorneys to find out if it would be fine with him and his company if he is filing for bankruptcy.
The kind of company the owner is working on is of prime importance. Normally, you would find most small businesses working as sole proprietor firms. Declaring bankruptcy for such organizations would not require the owner to take anyone else's consent from the company. In case, if the company is a Partnership firm, a joint consent of both the partners is essential.
The legalities to this increase with the change in the state of the organization! One thing is for sure though - There is an option by which small businesses could file for bankruptcy, if things are not going fine for them. At least for now, as a business owner you could get some breathing space to find a way out to fix the debt woes of your company.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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