When you’re going out of business but lack enough money to pay the business’s debts, you need forgiveness or be discharged on some portion of your debt. Alternatively, you can file for bankruptcy, where you liquidate your business assets and negotiate your debt settlements. This process is an out-of-court settlement. You can look for legal backing, where your lawyer contacts all the people you owe creditors and pleads with them to release you from the debt in exchange for some portion of the total amount you owe.
Creditors are advised to take up the offer because it’s often a
better choice than chasing down your remaining assets by suing you while hoping
that you won’t file for bankruptcy. If they choose a court battle, the
creditors can be left with almost nothing for them after deducting their
lawyer’s costs and fees.
Luckily, it’s possible to start afresh after losing everything
with focus and discipline. After filing for bankruptcy, you should first
inform all your creditors to avoid legal battles. Additionally, it can take up
to 10 years to be financed by a bank loan, according to Chapter 7 bankruptcy,
and almost seven years for Chapter 13 bankruptcy.
How to Recover After Filing For Bankruptcy
Below are tips to help you during your bankruptcy season.
#1. Maintain a Home and a
Job
If you haven’t already secured a job, you must get one as soon
as possible. Additionally, it’s crucial to find an excellent place to stay.
However, if you cannot pay the rent due to money issues, you can move in with a
friend or relative until your credit improves.
#2.Maintain a Bank Balance
It’s necessary to open and maintain a balance in your savings
account. In addition, having a history of dormant bank accounts could hinder
your ability to open a new savings account. Luckily, some banks offer
second-chance programs for bankruptcy. Keeping a balance in all your accounts
proves that you have a reliable cash flow to your employers and creditors.
#3. Pay your Bills
Ensuring that all your bills are paid up to date is
indispensable. Therefore, do not spend on unnecessary items that could further
lead you into debt. In addition, you need to keep your post-bankruptcy record
clean.
Unfortunately, more families continue to declare bankruptcy
through the Bankruptcy Abuse Prevention and Consumer
Protection Act (BAPCPA). However, another option that business owners can explore
before everything falls over is dip financing solutions.
These tools can help leverage your company during a formal
restructuring process.
Bottom Line
Ensure to use your post-bankruptcy credit and income wisely, as
it’s the key to rebuilding your rating and being able to stand on your feet
again. Therefore, if you can prove to lenders and employers that your
post-bankruptcy life is in order, you will have an easy transition.
Notably, it can be challenging to get a loan for the next couple of years. However, you may qualify for some loan only after a year, when your finance lenders will probably be from finance companies that charge high-interest rates.
