How Can Bankruptcy Work To Your Advantage With The Help Of A Lawyer
The word “bankruptcy” is feared and dreaded by most business owners at it might seem like reaching the bottom where there is no return. Of course, filing for bankruptcy does have a negative impact on your credit score, working closely with a bankruptcy lawyer can make this move a financial advantage.
How? Here are a few ways filing for bankruptcy can help business owners recover from financial strain:
- Debt Payment Suspension
Companies that file for bankruptcy with the help of an experienced bankruptcy lawyer can delay payment of their bills. Although it is a temporary suspension of payment, the time between can be used by companies to reorganize their structure and come up with a better plan for the company’s future.
In many cases, when payments are suspended the lawyer along with a debt committee will come up with a proposal for the company to pay its creditors only a percentage of what was originally owed, a notable advantage or struggling businesses.
- Renegotiation Of Current Contracts
Aside from only paying creditors a percentage of the original debt, bankruptcy also gives businesses a chance to renegotiate or end past contracts from vendors, suppliers, and even workers. Many of these vendors are willing to renegotiate the current contract terms if it means continuing to do business which will result in more jobs on their side.
In some instances, the vendors will opt to end the contract agree to be paid less which is favorable to the company who is declaring bankruptcy.
- Extra Time For A Company Reorganization
As mentioned before, filing for bankruptcy allows businesses a break from thinking and worrying about debts that must be paid. While it is only a short break, businesses can use the time to focus on strategies that will help the struggling comply turn itself around and become more profitable.
- Decreased Personal Financial Risk
The fear of bankruptcy will lead businesses to close their doors, but just because the business is closed doesn’t mean the payments stop. In most cases, the owners will end up using their personal cash and assets to continue paying rent, materials, supplies, and vendors despite no longer earning an income from the business.
Declaring bankruptcy will stop the outflow of cash coming from the owner’s personal account, decreasing their financial risk and vulnerability.
- Helps To Rebuild Credit Scores Sooner
The sooner bankruptcy is filed and accepted in court, the sooner you can rebuild your credit score. There is no denying that bankruptcy will have a major negative impact on your scores, making it more difficult to apply for loans in the future. However, the sooner you can act on rebuilding, the sooner you can increase your credit score again.
Don’t let the negative image of bankruptcy stop you from filing for one with the help of a trusted lawyer. With their help and your willingness to move forward despite some setbacks will ensure that your company will reach greater heights sooner rather than later.
A bankruptcy lawyer can help you avoid making mistakes prior to declaring bankruptcy and make it work to your advantage. Call Bolger Law Firm today!.