Bankruptcy
The repercussions for your small business
By Shenni Bubb
Prior to even contemplating bankruptcy, realize that the repercussions can be overwhelming. There are alternatives and avenues to try before you place your head - and business - on the proverbial chopping block. Claiming bankruptcy is a sure killer to your business credibility. In claiming it, you may almost certainly be blacklisted, and sadly, once you are on the blacklist, climbing from it can take years.
Unfortunately, a financially desperate person often doesn’t think as logically as they normally would, and thus often takes the wrong steps to fix their problems fast. The repercussions of bankruptcy are a major whiplash to a small business enterprise. The overall outcome can be extremely severe indeed. Therefore, ensure that the problem is far beyond repair prior to even thinking in this manner.
Legal Considerations
The new debt settlement laws are tougher than ever, but most creditors are still willing to negotiate with the consumers who wish to abstain from bankruptcy. Attempting to engage in a private negotiation may stop the process of bankruptcy and blacklisting. A viable alternative may often be reached through your honesty.
New bankruptcy laws will affect negotiation, so don’t go there if possible. See if your debts can be consolidated into one package.
The new laws were made possible after credit card banks lobbied. They’d held out for this for well over a decade. These lenders believe that the bankruptcy laws had been over-abused, and wealthy individuals were often hiding behind them. Thus they were fraudulently making false claims. The lobbyers needed to cover their own financial standing.
An Ounce of Prevention
A person needs to cover all aspects of their expenses to alleviate the possibility of bankruptcy. From the period of 1995 through to 2004, bankruptcy claims doubled. Yet in the same period credit card profits actually tripled. Take note also that credit card companies target “easy credit” for individuals who simply cannot afford them. Don’t be a victim - these actions have caused a surge in bankruptcy claims. Sadly, these pushy companies are not held accountable for insufficient investigation into the validity of giving low income earners credit.
Medical bills or employment loss are major contributors to 85 percent of bankruptcy claims. Ensure that you have sufficient medical coverage, and you will alleviate your risk to a great extent. This certainly applies to those over 60.
Divorced women and sole parents are 300 percent more likely to become laden with debt, so think twice before signing up for any form of credit if you’re in either situation. Low income earners are much more vulnerable to offers of instant credit, so be wary.
Personal Repercussions
Sadly, anyone attempting to file for bankruptcy is in for a shock - all your little luxuries such as mobile phone, dining out, social life and so forth, will soon become nonexistent. Your leisure assets and plans will now be accessed by the IRS and the courts, and declared “on hold.”
Fortunately, banks will be reasonably agreeable in settling with consumers on a mutual agreement for repayments, as they worry about what is deemed “stealth bankruptcy.” In layman’s terms, this is when a person basically moves, without a forwarding address, drops out of sight and begins a new life debt-free. The banks see no repayments at all. So in lieu of this probability, they may agree to meet the debt-laden person halfway, and come to an agreeable compromise.
