Bankruptcy Offers a Fresh Start

Posted on in Personal Bankruptcy

Illinois bankruptcy attorneyEither through a home or office based business or contracting out services, small, privately owned companies can present lucrative opportunities. At the same time, they can also require a heavy investment of both time and money. If sales goals are not reached, you could find yourself being harassed by creditors while struggling to pay your company’s debt. In this situation, small business bankruptcy is an option you may want to consider. While there are immediate impacts on your credit rating, these can be overcome. In the long run, bankruptcy can provide you with the fresh start you need to make your business a success.

Bankruptcy for Small Businesses

According to reports from the Small Business Administration (SBA), roughly 30 percent of all new businesses in the United States fail within the first two years, while only half end up making it to the five-year point. This is likely due to a combination of factors, such as high setup costs, unreached sales goals, and problems with advertising and targeting potential clientele. The good news is that if you can get past initial hurdles during these years, the greater the odds that your business will eventually be a success.

Filing for bankruptcy may be a way for you to recover from any initial financial problems your business experiences. Rather than having to close your doors or invest your time on other money-making endeavors, bankruptcy can help eliminate debts and allow for more practical repayment plans, while keeping creditors from harassing you or pursuing legal actions. The Illinois Attorney General’s office offers information on the types of bankruptcy that may be able to help your small business:

  • Chapter 7: If your business is a sole proprietorship, you may be able to liquidate both personal and business debts in your bankruptcy filing.
  • Chapter 11: If you own a corporation, LLC, or partnership, chapter 11 bankruptcy can help you reorganize the amounts you owe, allowing you to discharge some debts while structuring repayment plans for others.
  • Chapter 13: If you own a sole proprietorship or other business with less than $807,750 in secured debts or less than $269,250 in unsecured debts, you may be able to avoid surrendering property while repaying creditors based on your business’ future earnings.

Recovery from Bankruptcy

Once you file for bankruptcy, an automatic stay goes into effect. This prevents creditors from taking any further action on your debts. Once your bankruptcy is approved, you can take the steps needed to repair your credit rating. The Huffington Post advises the following:

  • Make sure your credit report is accurate;
  • Renegotiate vendor contracts;
  • Apply for small business loans;
  • Make sure all payments are made on a timely basis.

Once outstanding balances and past due amounts on credit cards and loans are eliminated or otherwise dealt with, recovery from bankruptcy is often quicker and easier than most people think. To discuss the available options for helping your company remain in business, contact the Law Offices of Eric G. Zelazny and request a free consultation with a passionate Tinley Park bankruptcy and debt relief attorney today.

 

Sources:

https://www.sba.gov/sites/default/files/sbfaq.pdf

http://www.huffingtonpost.com/jared-hecht/life-after-bankruptcy-when-and-how_b_8065790.html

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