Are you a business owner? If so, you’ve probably spent a great deal of time, money and energy developing and servicing your business. When financial trouble hits and it all starts to fall apart, it can all become completely terrifying. If you’re currently sitting amongst the terrified business owners cringing at the inevitability of bankruptcy, follow these simple instructions: allow yourself to panic for 5 full minutes. Then take a deep breath. And read our favorite tips for filing bankruptcy like a pro so you can get down to business and maximize the protection that it offers.
#1: Sometimes Bankruptcy Really is the Best Option
Once you’ve considered your options and decided that the only viable choice you have is bankruptcy, accept your own decision. Many find that, while filing for bankruptcy is not a walk in the park and it can be gut-wrenching, it is also almost therapeutic. No one can make this decision for you, but talk to experts and other experienced individuals you trust and then make the choice that is right for you and your business.
#2: Decide Which Type of Bankruptcy You Need
The most common types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 liquidates non-exempt assets in order to pay off creditors while the Chapter 13 reorganizes debt with a repayment plan. In most cases, Chapter 7 is the best choice for those who are dealing with overwhelming unsecured debt and a limited income. The Chapter 13 is a good option if there is a solid income, but time is needed in order to catch up on outstanding balances or to avoid foreclosure on property.
#3: Never Make Preference Payments to Creditors
It doesn’t matter why you’re doing it: you like them better, they’re phone calls are the most persistent, etc. Regardless of what inspired you to make a payment to one creditor and not the others will not be the issue when you file for bankruptcy. The issue was that you make a payment to one creditor and not the others. Your bankruptcy trustee is looking for just that scenario – scrutinizing any and all payments you made in the year prior to your bankruptcy filing.
If you need additional tips or hints regarding filing for bankruptcy like a pro, please get in touch with the southern California bankruptcy attorneys at Westgate Law. We can help you figure out what your next step should be in the filing process.