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How To Know When Bankruptcy Is Not For You

You might be considering Bankruptcy at this point.  It is an extremely hard and important decision to make.  While you are probably feeling like you are drowning right now.  Hope is in sight!  However, before you can make a decision, you need to be informed!

There are many times when bankruptcy can be beneficial to you.  There are approximately a little over one hundred Chapter 11 Pleadings filed in each district every month.  This means you are not alone!  There are other people out there that know exactly how you feel.  However, Bankruptcy may not be your answer.

There are many misconceptions to filing Chapter 11.  Ones that you may not have even considered but now do.

Filing Chapter 11 will not erase the debt!  In the pleading, the company must be able to outline the proposed Restructure, or future plan, that is has.  All current creditors must be included in this plan!  All current amounts due must be part of this plan and repaid through their payment schedule.

Filing Chapter 11 is not intended for those that are in a temporary slump.  Is your cash flow low, almost non-existent?  But is this just a temporary setback?  Is your biggest client going to pay for their contract next month?  Then Chapter 11 is not for you!  It is better to call your creditors and make some kind of payment arrangement.

Do you have a lot of non-dispensable assets?  Or maybe your assets are worth more to you than if you sold them?  Chapter 11 would not be a good choice for you.  Since your assets are a consideration when planning your Chapter 11 pleads, this could hurt you more than help you.

Are you not going to be able to operate even after filing for Chapter 11?  Chapter 11 was specially designed to allow the company to stay in operation.  Therefore, even if after filing Chapter 11 your business is going to close, then you may want to take a look at your other options first.  While none of us want to face the possibility of closing, there may come a time when even Bankruptcy won’t help.

The last thing to consider would be the effects this has on your shareholders.  More so if this is a family business!  Creditors receive priority over the shareholders everytime!

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Advice & Information for Those Considering Bankruptcy- Part 2

For people who want to be more involved in the decision, a good place to start is by reading the actual U.S. Code that applies to bankruptcy.  Bankruptcy is covered under Title 11 of the U.S. Code.  Individual chapters of particular importance are those pertaining to the type of bankruptcy you will file under, namely chapters 7, 11 or 13.  Be warned, this is not light reading and is written in language barely recognizable as English.

There are hundreds of independent websites that can provide you with tons of informative bankruptcy information.  Some of these sites perform a public service and others are part of private law practices.  Regardless of the source, there is a lot of information presented in plain English written for the lay person.  This information will present the basics of bankruptcy and give you some idea on what to base your ultimate decision as well as help you understand important factors.

When considering bankruptcy, a sound plan based off good research will ease the process.  Start by educating yourself online, and from there consult an attorney or financial planner.  Bankruptcy is not always the best option.  Research it carefully and if ultimately you decide it is right for you, you’ll be better prepared to begin the proceedings.

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