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Bankruptcy Options For The Recession Battered Business

Posted By admin || 7-Aug-2010

Bankruptcy Options For The Recession Battered BusinessMany businesses are suffering during this recession, past due bills, defaulting on loans, creditor lawsuits and clients who can no longer pay for their services and/or products are pushing many businesses to the brink of bankruptcy.  But can a recession battered business survive using bankruptcy or at least save the personal finances of the entrepreneur so that they can one day try again?  Let's take a look at some of the possibilities...

The first thing that business owners need to consider is whether or not their personal finances are entangled with their business finances.  In other words, has the business owner personally guaranteed any debts? If so, the creditors could go after the personal assets of the business owner if the business entity fails to pay even if the debtor files a business bankruptcy.  The next question the debtor needs to ask is if they plan to continue to operate their business after a bankruptcy.  If a debtor decides to continue to operate their business they can file a Chapter 11 bankruptcy which will allow them to restructure and repay their debts while continuing to operate the business.  If the debtor does not want to continue to operate their business and plans to close their doors, then filing a Chapter 7 bankruptcy for their business would be wise.  During the Chapter 7 bankruptcy, their business' assets will be liquidated and the proceeds distributed to repay creditors. If the debtor has personally guaranteed the debts of their business, then they will probably want to file a personal bankruptcy in addition to their business bankruptcy so that they can protect their personal assets.

Categories: Bankruptcy
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