Are you thinking about filing bankruptcy? If you own a business, you need to consider the risks involved in filing. In many cases, this move can close the doors of your business for good and lead to long-term financial implications for yourself. Still, it may be the best move for some people.
Before You File
Before you decide to file bankruptcy, it is a good idea to consider the structure of your business right now. Realize that indemnity insurance may or may not extend into bankruptcy, depending on your policy limitations. Depending on whether or not the business is incorporated, you may end up with financial risks on personal assets. This can be costly. Even more so, business insurance does not cover such costs or losses.
What You Need to Know
Before you make the move to file bankruptcy, know as much about it as possible. Hire an attorney to help you through the process.
- Realize that bankruptcy is permanent. Once you decide to file and the court moves to approve the dismissal of debts, you cannot get back any assets you lose.
- Bankruptcy laws protect some assets. These depend on the state you are in, and the type of bankruptcy you file.
- Bankruptcy laws do limit who can file. You must meet specific qualifications to have your petition accepted. However, reorganization of debt may be an option for some who are filing personal bankruptcy and do not qualify for Chapter 7.
Talk to an attorney. Know what the risks of filing bankruptcy are before doing so.