If I run a company and am in danger of going bankrupt, what can I do and what repercussions will bankruptcy have?
If you run a business and you're in danger of going bankrupt, there are some things that you need to consider, especially if you want to retain control of your business. First of all, you are going to be limited in what you can receive asset-wise from your business. Fortunately, business income and your personal income is something that is completely separate.
You receive a paycheck and the business has to have so much to stay in operation. The trustee that is assigned to you during your bankruptcy will have to know what is occurring on the business side of things to ensure that your assets are remaining where they need to be. If something happens that your business expands, you will still only be limited to what your asset limit is. In other words, you will have to hand over anything you receive in excess of what you are told you can have.
One way that you can keep better control over assets you gain from your business is to make your business a partnership. Some individuals do this with a spouse, especially if the other spouse is not filing bankruptcy. A partnership can also be made between friends and family. This is beneficial in case something happens that you need to sell some of your share of the business to the other person or persons. This will keep you within your asset limit and keep the business running just like it always has.
The good news, however, is that you can have a business. The downfall, though, is that you may not be able to receive business loans unless the business already has its own established credit. If the business does not have credit that has been established, lenders then look at your personal credit in order to loan you money. If you have filed bankruptcy, it is very unlikely that they will give you the money. This means that you will just have to make do with what you have within the business. This fact can also keep you from growing your business.
Money is needed to make a business grow, but bankruptcy may mean that it will take you 7 years to reach the point that you want to reach with your business. This is another reason why partnerships are good because your partner can apply for financing when the business needs it. So there is a way to get around this fact.
Other Question Categories
1. Your Credit Rating and Dealing with Bad Credit -> View All Questions
2. Dealing with Debt -> View All Questions
3. Non Conforming Types of Finance -> View All Questions