If your business is in financial trouble, struggling to make ends meet, how do you know what are the proper steps to take to correct it? Everyone's first thought is filing for bankruptcy. Are there any other options that a business could take to avoid Chapter 7 bankruptcy liquidation and be able to stay open repaying the creditors? There are a few alternatives to filing bankruptcy. First, there are debt consulting agencies which are especially equipped to help businesses. These financial consultants sometimes will offer a free evaluation of the finances to give the business a better picture of what is necessary to survive. This can be an important decision-making tool to see if bankruptcy is in the future of your business. At the very least, the consultant will give you an objective picture of your business.
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If you decide to hire a consultant to help you get out of debt, sometimes the consultant might have to act in the same capacity as a bankruptcy trustee liquidating assets. The main difference between the two of these is bankruptcy will put a black eye on the credit of the business, where liquidating assets from a consultant will not adversely affect the credit rating. Many times by making the proper financial moves and selling property the consultant feels it is unnecessary to keep, will make the business leaner and more profitable allowing it to recover with a positive cash flow. With enough cash flow, vendors and creditors will be more likely to give larger amounts of credit that would help the business continue operations smoothly. Some businesses are too far gone to go about it this way and end up having to file bankruptcy anyway. With your business at stake, it's always best to consult with a bankruptcy attorney before deciding on which method of debt elimination you choose.
If the decision is made that the business needs to file for bankruptcy, there is a lot of work that needs to be accomplished. Even though you're filing for bankruptcy, the court now requires a pre-consumer credit counseling course and post financial management course. When filing for bankruptcy, under Chapter 11 or Chapter 13, your bankruptcy attorney will have to prepare a court-approved payment plan to the creditors. Although this seems like you're wasting valuable time keeping all the parties happy in the bankruptcy, all this is necessary. There is no magic bullet to the choices the business should make when considering and filing bankruptcy. A business owner should remember to choose a financial solution that pays the contracts of the vendors that helped the business along the way. Keeping a good relationship with the creditors will help the business have sufficient capital to continue operations. A business needs to be able to move quickly if an opportunity comes up to expand or increase the customer base. Volatility is expected in most businesses, the continuous drops and profit can signal a fatal disaster. It's important for business owners to have knowledge in all the forms of bankruptcy filing with the current fragile economic condition.
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