10 Ways to Determine if Business Bankruptcy is the Right Solution

10 Ways to Determine if Business Bankruptcy is the Right Solution

🔥 1. EXAMINE DEBT-TO-INCOME RATIO: Evaluate if business debt relative to income is manageable; a high debt-to-income ratio could indicate bankruptcy consideration.
2. EXPLORE DEBT REPAYMENT OPTIONS: Research alternative solutions like debt negotiation, restructuring, and financial planning. If these options don't provide relief, bankruptcy could be a more suitable path
3. ASSESS DEBT TYPES: Differentiate dischargeable (can be eliminated through bankruptcy) and non dischargeable debts (need to be repaid despite of bankruptcy) to accurately grasp bankruptcy's impact.
4. EVALUATE LONG-TERM IMPACT: Reflect on bankruptcy's implications for business credit, future financial goals, and borrowing capacity. If the long-term consequences are manageable given your circumstances, bankruptcy could be viable.
5. CONSULT A BANKRUPTCY ATTORNEY: Get legal advice to gain insight into the situation and guide you on the alignment of potential bankruptcy with business circumstances.
6. PERFORM A ELIGIBILITY CHECK: Understand eligibility criteria for various bankruptcy chapters based on income, assets, and debts.
7. REVIEW ASSETS AND EXEMPTIONS: Assess asset values and their exemption limits within bankruptcy proceedings to guide chapter selection.
8. PERFORM A COST-BENEFIT ANALYSIS: Weigh bankruptcy costs (including legal fees) against potential debt relief benefits. If the benefits outweigh the costs, bankruptcy might be suitable
9. CONSIDER NON-FINANCIAL FACTORS: Consider non-financial ramifications, including emotional well-being and business relationships, when contemplating bankruptcy.
10. SEEK FINANCIAL COUNSELING: Consult with credit counsellors or financial advisors to make informed decisions tailored to the business' situation.
⇨ Feel free to add any points you may have.
Sources:
Lisa Smith, (2023) "Avoid bankruptcy with these simple tips", Invest opedia, 2023, April, vol, pp. 1
Liz Weston, (2021) "Nerd Wallet: When bankruptcy is the tight option",Personal Finance , 2021, pp. 1