Filing Bankruptcy - It’s No Easy Decision
The advertisements you see or hear urging you to enter into debt settlement to avoid filing bankruptcy are designed to give the impression that debt settlement would not harm your credit score like bankruptcy would. The truth is often the opposite. Working with debt settlement companies usually hurts your credit because you get further behind in payments, have larger past-due balances, and settlement itself is a negative on your credit score. Also, many people working with debt settlement companies find that they get sued by creditors anyway and then have to turn to Bankruptcy after they have spent thousands of dollars trying to avoid filing bankruptcy.
Even if a decision is made to enter bankruptcy proceedings, the work is just beginning. Sometimes debt counseling is a precondition to filing bankruptcy. After that, the plan to resuscitate the organization must be presented to creditors and other parties involved in the corporation. In addition, valuable time and resources are being invested in these proceedings. It seems as though this time and money could be better spent in actually building the business. There are no easy answers in the choice of a course of action to pursue in the consideration of Bankruptcy. In the midst of these considerations is the fact that integrity is an important factor in any successful business. A businessman should be especially careful to see that his decisions will be morally sound.
Options are available for corporations facing bankruptcy and managers must carefully weigh various paths to determine the best solution for a corporation. It is important to any business to have a good credit history in order to cultivate a relationship with necessary vendors. Good credit is also needed to ensure that sufficient capital will be obtainable to continue essential cash flow. Also, one must be able to react quickly if an opportunity to expand or solidify a customer base presents itself. However, a downturn in sales, excessive inventory or unforeseen events may leave a corporation struggling to make ends meet. Ups and downs are to be expected in any business, but a prolonged plunge in profits can signal disaster. At times like these, difficult decisions must be made, and an investigation into the various forms of filing bankruptcy may be required.
In both Chapter 7 and Chapter 11 bankruptcy filings, provision is made for redistributing assets to repay creditors. A bankruptcy filing may be required. Secured creditors are paid first, followed by unsecured creditors and, finally, stockholders. Interestingly, even securities from a corporation undergoing insolvency proceedings can be traded on a limited basis. Of course, these securities can carry a much higher risk of losing one's investment. Further information can be obtained from the Securities and Exchange Commission (SEC). The SEC maintains a database named EDGAR which keeps track of filings from corporations. Either way the corporations usually come out on top due to their limited liability.
Even if a decision is made to enter bankruptcy proceedings, the work is just beginning. Sometimes debt counseling is a precondition to filing bankruptcy. After that, the plan to resuscitate the organization must be presented to creditors and other parties involved in the corporation. In addition, valuable time and resources are being invested in these proceedings. It seems as though this time and money could be better spent in actually building the business. There are no easy answers in the choice of a course of action to pursue in the consideration of Bankruptcy. In the midst of these considerations is the fact that integrity is an important factor in any successful business. A businessman should be especially careful to see that his decisions will be morally sound.
Options are available for corporations facing bankruptcy and managers must carefully weigh various paths to determine the best solution for a corporation. It is important to any business to have a good credit history in order to cultivate a relationship with necessary vendors. Good credit is also needed to ensure that sufficient capital will be obtainable to continue essential cash flow. Also, one must be able to react quickly if an opportunity to expand or solidify a customer base presents itself. However, a downturn in sales, excessive inventory or unforeseen events may leave a corporation struggling to make ends meet. Ups and downs are to be expected in any business, but a prolonged plunge in profits can signal disaster. At times like these, difficult decisions must be made, and an investigation into the various forms of filing bankruptcy may be required.
In both Chapter 7 and Chapter 11 bankruptcy filings, provision is made for redistributing assets to repay creditors. A bankruptcy filing may be required. Secured creditors are paid first, followed by unsecured creditors and, finally, stockholders. Interestingly, even securities from a corporation undergoing insolvency proceedings can be traded on a limited basis. Of course, these securities can carry a much higher risk of losing one's investment. Further information can be obtained from the Securities and Exchange Commission (SEC). The SEC maintains a database named EDGAR which keeps track of filings from corporations. Either way the corporations usually come out on top due to their limited liability.
