Should Business Owners File Bankruptcy in the Current Economy?
Written by Robert DeMarco
Bankruptcy is when an individual or organization cannot pay their debts and chooses to give up most of what they own to get out of debt. When someone files for bankruptcy, it means that all their property becomes the property of another person or entity called a “trustee.” The trustee sells off the debtor’s possessions to raise enough money to pay back creditors. In exchange, the debtor gets financial relief from paying back all their bills, and most of the bankruptcy is forgiven.
If you own a business, filing for bankruptcy means that your company can no longer exist, and it will be closed down so that creditors can get what little money more to get from your assets. In times like these, bankruptcies tend to go up because people have lost their jobs and can’t pay debts they owe money on. If your business is the only source of income you have, then filing for bankruptcy might be a good idea for yourself, but if bankruptcy means that your company will close down, there’s a chance that going bankrupt could cost more than it would gain you.
It has been unfortunate for many people in Plano, Texas, to go through as COVID-19 cases continue skyrocketing and businesses’ savings plummet. Millions of people have filed for unemployment, with over one hundred thousand new filings every week – that is more than four times the population of Buffalo! As we near Thanksgiving dinner time soon, it’s hard not to think about what our families will be thankful they don’t need another job right now. Many local employers struggle due to their inability or refusal to adapt quickly enough following this global pandemic.
It’s a tough time for all the local businesses in Plano, Texas. With bankruptcy filings on the rise and banks tightening their lending criteria, it has become more complex than ever before to start or grow your own business without help. When you’re struggling as an entrepreneur with debt, there can seem like no end in sight until one day all goes silent- literally! That is why DeMarco Mitchell, PLLC a bankruptcy lawyer in Plano, TX, is here offering guidance through different options depending upon how much money you have available, so please call today if these services sound right up your alley.
Small Business’ Financial Difficulties in Plano, Texas During a Pandemic
With the closing of many small business places in Plano, Texas, owners are forced to either lay off employees or pay unpaid bills. These same people will have to spend time on phone calls trying to figure out if they can reopen their shop with loans from bank agents and vendors and regular clients who lend support when possible.
Closing your restaurant is not an easy decision for any entrepreneur – especially during these challenging economic times! If you’re one of those Texans that has had enough, though? Your best bet might just be calling up some friends before it gets too late because there may still be options available for funding at least part-way through things until payday arrives again soon.
The recent Goldman Sachs survey shows various options that many business owners would like to see made available by the government, such as grants and payroll tax cuts. The top three most popular were reimbursement for paid sick leave (51%), delay in paying taxes without penalty, or interest charges on loans taken out recently with lower rates than what one would be able to negotiate elsewhere. Another option was an extension/refinancing at current low-cost mortgage terms while still taking advantage of these lower prices before they go up again in six months – this was opposed to only 42%. Lastly, there are also quick loan programs backed by S.B.A. for those who need to pay bills quickly with no collateral; voters approved this plan at almost twice the rate as the bank-jobs proposal, 70% versus 36%.
Should You Get A Loan or Declare Bankruptcy?
Declaring bankruptcy is a difficult decision, but if you’re unable to pay bills and get back on your feet, it may be the right option for you. If you choose bankruptcy, you must seek advice from a bankruptcy attorney who can best advise you of the options available to reduce your debt and get back on your feet.
Businesses in Plano, Texas, affected by COVID-19, are looking for professional help. There is no time like the present to call DeMarco Mitchell, PLLC They offer these exact bankruptcy solutions to those just like you facing similar challenges and difficulties that we all take for granted in times of plenty!
Taking out a loan is not the best way to handle your business’s financial problems, and it might seem like an appealing option in comparison with bankruptcy. Still, it would help if you were careful about how much more debt can pile up on top of what already exists without solving any underlying issues that caused them in the first place. The US Small Business Administration (S.B.A.) provides loans and grants through their associations for private businesses and nonprofits; federal stimulus funds are also available depending upon specific criteria, including being associated with S.B.A. or belonging to one of its member organizations. But don’t count on these things! Borrowing can be a risky decision for business owners, but it’s one of the only options left if you have no way to generate sufficient revenue in the future.
Filing For Chapter 13, Chapter 7 & Chapter 11 Bankruptcy
The United States government understands the importance of small businesses and takes steps to help them survive. However, obtaining additional grants or loans can be time-consuming while being incredibly competitive. If you are past your point with grant applications but still want more financial assistance for your business than what’s available through traditional routes like grants plus low-interest rates on loans (which many banks don’t offer), bankruptcy might do the trick!
There are three types commonly used by entrepreneurs when seeking relief from debt:
- Chapter 13 Bankruptcy requires filers who have regular income post-bankruptcy to pay debts over an extended period and see significant savings. However, it might not be easy to prove steady income and require a bank account (or bank accounts) to qualify.
- Chapter 7 Bankruptcy where individuals liquidate most assets, including cars, so that everything has value enough to pay creditors. Unlike Chapter 13 bankruptcies, this option offers the quickest and most relief and doesn’t require bank accounts to prove income.
- Chapter 11 bankruptcy where owners or managers of a business seek protection from their creditors, allowing them to restructure repayment terms. It is a relatively uncommon choice for typical debt relief because it requires good credit scores and bank accounts. Still, certain business owners may benefit from using this approach to retain their companies’ assets. Chapter 11 bankruptcy is also known for being complicated to navigate, so consider consulting an attorney if you are considering this option.
The bottom line is this: filing bankruptcy for your business might be the best option if you have any problems paying bills over an extended period. If you have a company in Plano, Texas, be sure to call DeMarco Mitchell PLLC for a consultation today!
It’s no secret that bankruptcy is not the first option for most business owners, but with COVID-19’s economic effects, so many more will be forced into this position, there needs to be some change. With DeMarco Mitchell, PLLC helps people prepare and guide them through filing for protection under Chapter 7, 13, or 11. We can help ensure your small business’s future by providing knowledge about what you’ll need before going forward alongside all legal counsel needed during the process to ensure you can get back on your feet fast.
File Bankruptcy With a Bankruptcy Attorney
There is a lot of confusion about bankruptcy and the best way to go. Chapter 7 will protect you from creditors, but it can leave your business up in smoke if things don’t work out with debts ratio-wise. At the same time, 11 provides more protection for partnerships/corporations who have enough income that they may not qualify under chapter 13 otherwise (it just has too much equity). A considerable advantage: The reorganization plan comes first before any vote by lenders, which means there’s more chance at success!
If the court approves this plan, it can pay creditors over time to terminate contracts and leases. The business also has a chance to recover some assets from those they have discharged and their debts to come off of your plate finally!
The DeMarco Mitchell PLLC bankruptcy attorneys can help you avoid the consequences of a poorly thought-out decision by providing thoughtful legal guidance for your unique situation.
Benefits of Bankruptcy for Struggling Small Businesses
Bankruptcy can give a fresh start to small businesses by reducing or eliminating unsecured debts. It also consolidates dealings with creditors, saving them time and preventing legal actions during the bankruptcy process for many people who choose this option as their means out from under financial strain in business ventures. The benefits may include improving operating standards that attract investors instead of loans if they have been inadequate so far – giving these companies another chance at success after finally managing not just to survive but thrive!
While the bank account might not be liquidated during bankruptcy, all of its tangible assets could be. The bank account might even have to stay open if the business is operating, or it would need to be kept at least halfway liquid for day-to-day operational expenses after bankruptcy has been declared.
Once small businesses have survived bankruptcy, research shows that they are less likely to seek unsecured debt and more inclined towards investors. In addition, there is no difference in financial problems between these types of operations that haven’t filed for Chapter 7 or 13 filings before now as opposed to those with prior bankruptcies.
It can be challenging to determine the best course of action when your small business is in financial trouble, but you do not have all year for this decision. If it feels like too many options and none will work out well enough, then take some advice from one who has been through this themselves – hire an experienced bankruptcy attorney!
Many people believe that hiring someone outside their company would only create more hassle down the road. However, attorneys understand how complicated these processes get because they’ve done them before on behalf of businesses like yours with similar challenges, so don’t shy away from reaching out if need be.
Business Bankruptcy Lawyer in Plano, TX
It is essential to consider all of your options when deciding whether or not you should file bankruptcy. If you are considering filing, please get in touch with us to consult on the benefits and drawbacks. We will help you make the correct decision about how best to handle your debt situation depending on where it stands in relation to current laws governing personal bankruptcy filings. DeMarco Mitchell, PLLC is a firm of bankruptcy and insolvency attorneys in Texas. We can assist you to file for bankruptcy if your business needs to go under the current economic climate. Contact us today at (972) 578-1400 with any questions about our services and pricing plans!
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