Bankruptcy is a legal process that enables people and businesses to restructure their debts and absolve them of their legal obligation to repay creditors. It is an option for those small businesses struggling to stay afloat after a credit crunch or for companies unable to generate enough assets to repay their debts. The decision of when to file for bankruptcy can be difficult. Most companies and individuals choose not to declare bankruptcy because it can be very costly. It requires hiring lawyers and filing the paperwork with the local court, which may take months before anything happens.

5 Circumstances When A Small Business Should File For Bankruptcy
1. It Doesn’t  Make Enough Money To Repay Debts 
Some small businesses are not profitable enough to handle their accumulated debt. They might be spending more than their revenue. The losses incurred in a few years can lead to a point where the company cannot repay its creditors. At this point, filing for bankruptcy would be better than risking the business being taken over by a creditor it has defaulted on.

2. It  Has the Necessary Assets To Repay Debts
Small businesses may have assets they can use to repay the debt if they can sell them off before filing for bankruptcy. For example, a person or company might have a property they can sell off to pay creditors. They can also use other assets like cars and shares of stock to raise money to get the business out of the red range in which it’s currently operating.

3. It  Is Struggling To Manage Its Accounts
Small businesses find it challenging to manage their accounts. The company may not have a clear idea of its revenue and expenditures. Some small businesses might be losing money, even if they are turning a profit. For example, some companies may have revenues but cannot pay their creditors as they only have minimal profit margins. Filing for bankruptcy can be the best possible move to make.

4. The Business Owner Is  Distressed By Its Debts
The business owner might be distressed because of their debt. They might be unable to keep up their payments because of personal problems or other disruptions in the running of the business. Filing for bankruptcy can be the best option if the business person can see it as a lesser of two evils.

5. The Company Is Facing Legal Disputes Or Other Problems
A lot of companies end up in legal disputes where creditors sue them. If a small business could pay off its debts, it would be better to do so. At the same time, it is also advised for business owners to talk with their creditors first to see if they can work out an agreement to make their payments on time without them filing for bankruptcy. A legal suit would not only put your business into losses but also cost you lots of money in legal fees.

For a small business to choose the right bankruptcy option, it is advised to go through the process with an experienced bankruptcy attorney who can advise them on whether they should file or not. The best thing that a business owner can do is to reach an agreement with their creditors first before making any move on a bankruptcy filing. Fair Free Legal Services will be providing information for everyone about Bankruptcy Law.

Business Name –  Fair Fee Legal Services (formerly Ballstaedt)

Address: 8751 W Charleston Blvd #220, Las Vegas, NV 89117

Phone Number: (702) 715-0000