For most people, filing bankruptcy is an unfortunate way of closing a business. Companies that don’t plan to reopen typically turn to Chapter 7, a bankruptcy process that involves a trustee who will seize and sell all of the company’s remaining assets to eliminate debt. Sad, yes, but do you know that there are advantages in this process? Here are some of them.
Involves a faster method
Unlike other bankruptcy codes, filing Chapter 7 only takes 60 to 90 days to complete. Osmond Law and other bankruptcy lawyers from West Jordan say that the method involves four steps:
- Submitting the bankruptcy case to court
- Credit counseling
- Meeting with a lawyer and a trustee
- Receiving the discharge notification from court
Frees businesses from unsecured debt
Dealing with creditors is stressful, especially when you don’t have the money to pay them. A Chapter 7 bankruptcy frees businesses from expensive bills, credit card payments, and other billing agreements done in the past. It protects debtors from collectors through “automatic stay,” a legal injunction that temporarily halts creditors from seeking payment.
Allows an entrepreneur to loan again
Upon discharging all debts, entrepreneurs undergo a recovery process — a procedure that allows them to start anew financially. During this period, entrepreneurs have the chance to make their credit score rise, allowing them to qualify for a loan again.
Provides a fresh start
Financial difficulties are part of every business. A Chapter 7 bankruptcy may seem unfortunate, but it allows entrepreneurs to learn from their mistakes and start again. However, it is important to seek financial advice, especially when opening a new business as entrepreneurs can only file bankruptcy every six years.
Maintaining a good financial record is essential in business. Apart from expanding your venture, this also allows you to boost your credibility. Be smart when doing business and take advance steps to prevent bankruptcy.