In this struggling economy, keeping a small business alive and profitable has become more difficult. Many consumers are limiting their spending, and are observing tight budgets. And with these budget cuts and spending restrictions, businesses find it hard to stay afloat because of the decrease in customers. If a large corporation fails, bankruptcy could be a good option to explore.
Many small business owners invest a substantial amount of their own money, so when the business fails, the owner often ends up with a lot of debt that is nearly impossible to repay. Bankruptcy is a wise decision for the business owner, because it will prevent him from hemorrhaging more money from his failed investments. A website like Total Bankruptcy could connect you with a bankruptcy attorney to guide you through the process and lead you to the path of financial recovery.
How to File for Bankruptcy
For some, filing for bankruptcy is the only way to stay afloat amidst mounting debt with no capital coming in to offset the bills. There are a few required steps in order to begin the bankruptcy process:
- First, individuals must file for personal bankruptcy, which could give them a “fresh start” and discharges any unsecured business and personal loans. This means that future income will not be subject to repaying these loans, whether it is from a new business or simply working on a new job to get by.
- The second step is to surrender assets that are considered non-exempt, which will be used to pay the debts. Most states consider an occupied residence to be exempt, which reassures individuals that they will still have a place to live.
Protecting the Family
Filing bankruptcy can be a good way to protect the daily living needs of a small business owner and his or her family. Some might continue to put needed cash into the business to cover expenses, anticipating that the economy will soon turn around and the business will become profitable once more. However, at the expense of shelter and food for one’s family, this is simply not worth it. Choosing to file bankruptcy can ensure that the family will still have a home and income to cover the living expenses.
Obtaining Additional Guidance
Small business owners who decided to file for bankruptcy will often benefit from seeking guidance from a bankruptcy attorney. These professionals can provide more current information on laws and processes, which help the debtor receive a better outcome. Choosing this option can be very difficult, especially for those whose business has been their pride and joy, but it is becoming more common as financial struggles continue.