When your business started facing financial struggles, you may not have felt an immediate sense of panic. Most companies face losses and are able to get back on track by utilizing the right business strategies. However, now that your company's financial situation has gotten increasingly worse, you may worry that recovery is no longer an option and that you may have to close down.
Before you start the process of dissolving your business, you may wish to consider certain efforts that may help your company financially while also giving you the opportunity to keep the doors open. Filing for Chapter 11 bankruptcy helps many businesses deal with creditors, lenders and other factors relating to financial issues. However, you may think that this route will cause more harm than good.
Many people often believe myths and misconceptions regarding bankruptcy. Because this false information remains so widely circulated, you and many other people may disregard bankruptcy as an option. Rather than taking this approach, you may wish to ensure that you have the right information. Common Chapter 11 bankruptcy misconceptions include:
Many people believe that if they do not file for bankruptcy and avoid paying back their creditors that they will go to jail. This scenario is unlikely, as debtor's prison no longer exists. However, if you take illegal steps to avoid paying debts, you could face criminal charges. Additionally, creditors could still take you to court in an attempt to collect on the outstanding balances.
Another misconception relates to damage to credit scores. Commonly, individuals believe that filing for bankruptcy will damage their credit forever. Luckily, the negative impacts bankruptcy may have only last for a handful of years, and many options exist for rebuilding credit. You may also want to remember that if your company's financial situation has already gone far downhill, your credit may already have suffered considerably.
The third myth that may cause you and others to hesitate when it comes to bankruptcy relates the views of the court. Some people may think that bankruptcy courts have a positive bias toward creditors, but the court does not take sides. This means that you have the ability to obtain a beneficial plan to help address your debts.
Unfortunately, numerous people often take myths as truth, and as a result, they may cheat themselves out of a beneficial option for dealing with their debt. If you would like more information on how Chapter 11 bankruptcy could potentially help you and your business, you may wish to utilize local California legal resources.