As much as you would want to avoid going deep into debt, there’s always the possibility of events that are beyond your control. And these can impact your business financially in a negative way. Sometimes, you might even get close to shutting it down, to the point of bankruptcy. Bankruptcy can be a complicated process, but it can become much smoother for you if you avoid doing the following activities.
Not Getting a Lawyer
While it’s not required for you to get legal assistance, it’s still best to at least seek professional advice. As mentioned earlier, the process can be tricky, and you don’t want to make any mistakes that will cost you and your company. A wrong move can make your business lose more than what it already has. To navigate through the ins and outs of bankruptcy, get the help of a trustworthy civil litigation lawyer, preferably one with experience in the field.
The process of filing for bankruptcy includes looking at your financial records. People need to see that you and your business really have no money to spare for paying off your creditors. You might be tempted to spend the little cash that you do have since your debts will be forgiven to a degree anyway. However, spending a lot right before filing for bankruptcy will give everyone the idea that you’re just out to fool them. In this situation, the case will likely be turned against you.
Taking or Giving Away Assets
What would be called your finances isn’t just limited to money itself. The various items, equipment, and materials that are essential to your business can also be considered and called assets. Records regarding these will also be looked at when you file for bankruptcy. If, for example, you took some of those assets for yourself or gave them away to friends and family, then it would count against you. Just like with a shopping spree, the case may also be turned against you.
Making Payments Towards Unsecured Debt
Declaring bankruptcy will discharge unsecured debt that’s covered by it. This means that they’ll be wiped out, leaving you with less to deal with. If you put two and two together, it would make more sense to stop paying these particular debts since they’ll be cleared anyway. However, you should still check to make sure which ones are dischargeable and which aren’t.
Not Telling the Truth
If you do have a lawyer helping you out, make sure that they have all the information that they need to know. They’ll need to look for evidence that you are, indeed, unable to pay off your debts. They’ll also need to know about any possible angles that your creditors might use against you. Not telling them everything can open you up to a situation that they can’t help you with.
Don’t be scared or ashamed of having to file for bankruptcy. It can be what will save you and your business when there’s no other way to turn. However, you shouldn’t be using it as a way to try and cheat the system. The tide can turn easily in this kind of case, and you might have to be the one making more payments than you initially had to. Only resort to filing for bankruptcy when all other legal choices have been exhausted.