Reasons For a Corporation to Consider Filing For Bankruptcy

Posted on February 8, 2010
Filed Under Debt Consolidation, Avoid Bankruptcy, Business Bankruptcy, Chapert 11, Chapter 13, Blog Carnivals | Leave a Comment

The marketplace has a significant capacity to reward an entrepreneur who has a genuinely innovative and useful product or service to offer. Certainly, the prospect of monetary success acts as a strong lure for the creative and industrious people who endeavor to open their own businesses. The reality, however, is that few companies are able to achieve extreme financial successes and many do not even remain functional as going concerns beyond the first several years. At times, however, both new and established businesses may find themselves in a position where they are increasingly unable to keep up with financial obligations, and a bankruptcy filing may offer the most suitable option.

There are several forms of bankruptcy protection available to corporations with each being designed to address a different set of concerns and with unique filing requirements and implications. Contrary to popular belief, filing for bankruptcy does not necessarily mean that a business will no longer be able to operate, nor does it necessitate that assets must be liquidated to satisfy the demands of creditors, suppliers, or other parties to whom the company is indebted. Consulting with a skilled and experienced bankruptcy attorney can provide you with valuable insights into the potential advantages and disadvantages of a variety of debt resolution measures.

When to File

Obviously, some struggles are expected during the early years. Even multinational corporations are subject to fluctuations in the global economy and consumer taste, so there is a strong temptation to simply accept or dismiss some financial issues as reasonably typical. But having blind faith that things will turn around or just attempting to ignore a mounting backlog of unpaid bills and other debts will do nothing to improve the situation and will only serve to make things worse and more challenging to overcome going forward.

Generally, if there is a pattern of being consistently unable to make full and timely payments, it should serve as a sign that there are severe problems. To help you begin to form an understanding of some bankruptcy concerns, consider the following business bankruptcy organization:

Chapter 12 Bankruptcy is available for small farming, fishing, and ranching operations
Both Chapter 12 and Chapter 13 offer a company the chance to restructure and reorganize the corporate operation and the terms of debt repayment arrangements
Chapter 7 requires that a company cease operations and sell assets to satisfy creditors, and should be regarded as something of a last resort for a lost cause

Who to Trust

To learn more about what we can do to help your business through this challenging phase, contact the Arizona bankruptcy lawyers of the Harmon Law Office, L.L.C.

Joseph Devine

How Long Does Bankruptcy Affect Your Life?

Posted on February 7, 2010
Filed Under Debt Consolidation, Avoid Bankruptcy, Business Bankruptcy, Chapert 11, Chapter 13, Blog Carnivals | Leave a Comment

If you have recently filed bankruptcy or are considering filing, you may feel as though your credit will be ruined forever. While bankruptcy does affect your credit, it may not be as horrible as you envision. While it is true that bankruptcy will stay on your record for 10 years, as time passes and you pay your bills on time, its negative effects will decrease over time as you build a positive credit history.

The first year of bankruptcy will be the most difficult. Lenders will note that you have a rough financial past and will be leery to lend you any credit. It is nearly impossible to get an unsecured credit card, although there are a few companies who will issue one depending on your income. While you may be approved for a credit card, the interest rate will probably be very high and your limit will be very low ($250-$500).

Effects on Credit Cards

If you cannot get an unsecured credit card, you will be able to get a secured credit card. Secured credit cards require you to make an initial deposit of at least $200.00 or so, and that is used as your credit limit. A secured card is not a debit card or prepaid debit card, it is an actual credit card and can be used as so. You will receive monthly statements in the mail and be required to make monthly payments. Secured credit cards do report monthly to the major credit bureaus, and they are a fantastic way to improve your credit.

Effects on Car Loan Eligibility

You may be able to obtain a car loan after a year has passed on your discharge. Although you may be able to obtain a loan, your interest rate will be very high and will probably require a large down payment. The longer you wait from your discharge, the better terms you will be able to negotiate with a lender.

Home Loan Problems

Bankruptcy will also prevent you from getting a mortgage loan for two years. After you have taken substantial steps to improve your credit, you will likely qualify for an FHA loan with a down payment as low as 3%.

Bankruptcy does not have to ruin your life. It will affect you for many years, but you can minimize the negative effects by acting financially responsible. Your life will go on, and you will be able to obtain credit cards, home loans and car loans as long as you maintain a good credit rating.

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