Home Money & Finance How to Determine if Your Company Should Hire a Debt Settlement Attorney

How to Determine if Your Company Should Hire a Debt Settlement Attorney

by Olufisayo
Debt Settlement Attorney

Other Options besides Bankruptcy Can Keep Your Business Alive

The coronavirus pandemic has made times tough for everyone, businesses included. With delays in manufacturing, the inability to get parts, and staffing issues, it’s no small wonder why many businesses relied on government loans.

But now that money has been used up, and financial hardship continues to rear its ugly head. Debt settlement or bankruptcy are options you could pursue, so being informed is important if you’re considering taking the next steps.

So how do you decide when it’s time to hire a debt settlement attorney?

Is Now the Time?

If you’ve found your business in a financial predicament, and you cannot meet financial obligations to your employees, vendors, or property management company, then seeking bankruptcy or debt settlement is a sensible step.

The easiest way to determine whether it’s time to do so is to ask yourself, “Can I pay all my expenses this month without coming up short? Was I able to pay all my expenses last month without coming up short? Will I be able to pay all my expenses next month without coming up short?”

If you cannot answer “yes” to these questions, then it’s probably time to find a bankruptcy or debt settlement attorney.

Another important question to ask yourself is whether you actually want to continue fighting for your business and keep it going.

Sometimes your heart just isn’t in it anymore, and you’re ready to accept the loss. If this is the case for you, then it’s time to get help with filing for bankruptcy.

Know the Difference Between Debt Settlement and Bankruptcy

Business owners could seek debt settlement or file for bankruptcy with the help of specialized attorneys. The right path greatly depends on your specific situation and the type of business you operate.

Small business bankruptcy can resolve your business debts, but may not remove your own personal liability. Because of this, small business owners sometimes must also file personal bankruptcy, which allows you to walk away from guaranteed business debt, like leases and contracts.

Options for corporate bankruptcy require you to liquid business assets in Chapter 7 or restructure corporate debt in Chapter 11. Sometimes, small business owners can liquidate and dissolve a corporation or LLC without having to file for chapter 7 bankruptcy.

If you’re considering either type of bankruptcy for your small business, you absolutely must speak with a bankruptcy lawyer to understand how filing for either form of bankruptcy will affect you and the debt you’re liable for.

Debt settlement, on the other hand, does not require declaring bankruptcy because your bankruptcy attorney will negotiate with your creditors to reduce the balance you owe.

To qualify for debt settlement, you must be late on payments to your creditors, and you may need to have a lump sum of cash to make payments. Some debts cannot be settled, so you need to be forthcoming with your attorney about what you owe and to whom.

Opting to Restructure

Corporations that file for Chapter 11 bankruptcy get a chance to negotiate with their creditors in a process called debt restructuring. In some cases, the process results in completely dismissed debt.

Although the process is long and pricey, companies can use this form of bankruptcy to reorganize and restructure so the business continues to operate with a fresh start.

To qualify, you’ll need a business plan that outlines how your business will operate, where it will earn revenue, and what types of expenses it will incur should your business pivot.

If you can create a business plan that details how you’ll maintain a positive balance sheet after bankruptcy, Chapter 11 may work out for you.

Making Wise Decisions about Finances

Small businesses unable to pay their creditors or that are rapidly losing money must consult with an experienced attorney to determine the next steps. An in-depth evaluation of liquid and fixed assets and a review of your current debt help guide the process.

An experienced bankruptcy attorney or debt settlement lawyer will know exactly what to do to help relieve you of your debt and financial woes. It is of the highest importance that you interview a variety of attorneys to determine which will work best on your behalf.

Photo by Karolina Grabowska from Pexels

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