Unraveling all viable options when you’re unable to pay business debts

Unraveling all viable options when you’re unable to pay business debts

If your business or enterprise has been in the pit or red for a considerable period of time, and you can’t repay your business debts, your lenders may start fishing for money. They can do so by threatening to sue you or your company. The way you’ve set up your business, and whether it guarantees any repayments or debts, these factors dictate the amount your creditors can get from you. In addition to this, you need to think whether you’re eligible to file for a bankruptcy claim. This claim can also change the amount but it has its obvious pitfalls. You need to make an assessment of your financial condition, capacity and affirm the exact debt amount to be paid.

Starting off with taxes

Talking about taxes labeled on payroll is an important context. Unlike the above mentioned scenario, the IRS (internal revenue service) has no stakes in the way you organize your business. They hold each business owner personally accountable for all unpaid or outstanding payroll taxes. Knowing the modality of sole proprietorship and general partnerships is also crucial. The way the former works, you and the business becomes the same entity. It means that you’re personally liable to pay your business debts. In case of a partnership, you can all your partners are personally responsible to repay the debt.

On bankruptcy claim

It’s feasible to consider bankruptcy when and only if your business is soaked in debt and totally facing extinction. You may have creditors attacking you from all quarters. There must be a lot of assessment and though prior to a bankruptcy filing. However, the claim may be able to give you the time required to get everything sorted out. It’s quite a dicey roadmap but if managed effectively and wisely, it can bear fruits. There’s however no guarantee what collateral or property you can keep post a bankruptcy claim except for a few exceptions. You need to prepare yourself for this.

The bankruptcy options

Owing the sole proprietorship nature, you can find the option of either going for chapter 7 or chapter 13 of the bankruptcy law. You need to meet the requisites to file your claim. You can use either of the options to satisfy and eliminate your business and personal debts. Now, if you’re a general partner, shareholder of a company, or a LLC (limited liability Company) owner, and you’ve waived the limited liability by guaranteeing an amount of loan for the company personally, a bankruptcy proceeding won’t be able to protect you. You can shield your assets in such situation by filing for personal bankruptcy.

The immediate pros

One of the primary benefits that come from a bankruptcy filing is time. You get the time and specific bandwidth to arrange finances. Once you’ve filed your claim, the concerned court puts an immediate stay order on each debt collections, which means that no creditor can repossess or foreclose on your property. Besides, bankruptcy can also eliminate unsecured debt. You need to take expert guidance to know the intricacies of both chapters before filing one.

Opting for best credit card consolidation is a smart move in today’s time in order to solve your financial and debt issues and make life easy. Once you have learned about it you will not want to go for any other option when you are in trouble.

Category Business

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