Many view filing bankruptcy as a hopeless fate to be avoided at all costs. While it is a situation businesses hope to avoid, the word’s negative connotation has bred a number of myths that may keep corporations or partnerships from considering filing bankruptcy as a way to keep their companies afloat.
Myth: You’ll Lose Everything
In the vast majority of cases, this is not true. While Chapter 7 bankruptcy does involve the liquidation of assets, there are certain types of property that are protected from creditors. Chapter 11 reorganization bankruptcy allows you to renegotiate your debts to take some of the weight off. Many businesses use Chapter 11 bankruptcy to keep their business going while obtaining relief from creditors.
Myth: Filing for bankruptcy is impossible
Some of the recent bankruptcy laws passed have caused businesses to think that it’s much more difficult to file these days. While there are more requirements in place, these are designed to deter those who would commit bankruptcy fraud rather than turn away those who truly need it. Odds are, if you need to file, you’ll be able to.
Naturally, this means you will need to be transparent throughout the process. Any perceived attempt to pillage or withhold assets—even if that’s not your intent—could be interpreted as bankruptcy fraud, so be sure you are open throughout the process. In addition, enlisting the help of a commercial bankruptcy lawyer will ensure you avoid any pitfalls while filing.
Myth: Filing bankruptcy means you failed
Bankruptcy is a way to protect your business from creditors, renegotiate repayment of debts, and get a new start. Your business may have made some critical missteps, but that doesn’t mean it’s the end. In fact, getting the debt relief offered by Chapter 7 or Chapter 11 bankruptcy may be the first steps on a path that leads to future success.
If your business debt has become unmanageable, filing for bankruptcy may be your best option. When considering this, it is vital to get advice from experienced commercial bankruptcy attorneys. Contact Bennett, Weston, LaJone & Turner, P.C. to arrange a consultation with a bankruptcy lawyer.