A common belief about bankruptcy is that it absolves all of your debts. This is a wrong belief. Whether personal or business bankruptcy, going bankrupt involves selling your assets or shutting down your business or paying hefty fines. It’s not as easy as it seems to be.
Business people usually think that they can simply declare themselves bankrupt in case their business fails. However, the word “simply” is deceptive here. It isn’t simple, as bankruptcy is a complicated law by itself. Also, it is not always the best choice to file for bankruptcy. So, before you make a decision, it is good to consult a small business bankruptcy lawyer in MD. He or she will guide you into making the right decision and in proceeding with the bankruptcy filing steps correctly. Should small businesses file for bankruptcy? This is an important question that a small business owner must get an answer to before they hastily decide to file for bankruptcy. According to a reputable lawyer, if your business is limited-liability entity, you can simply shut it down and walk away. You need not file for bankruptcy. That’s why business lawyers usually advice new business people to register their company as LLC or Corporation or Limited-Liability Entity. This helps you safeguard your personal assets in case your business fails and the creditors hound you. This isn’t all Even if you run your business as sole proprietorship or in partnership, you can still bring your personal assets to risk, if you fail to run your business properly. Several reasons play a role for this to happen. According to lawyers, You may not have separated your business finance and personal finance properly. In this case, the court will realize that there is actually no separate business entity. It will disregard your entity and put your personal property at risk. Banks and other lenders are not so eager to finance new businesses. They are afraid they won’t have a means to recover in case the business owner defaults on the loan. Due to this, many business owners put their personal property at stake as a “personal guarantee” to get approval for loans to start the business. Some even get financing through personal collateral, like home. This puts both your business and your home at risk, in case your business fails. Avoid getting in such a situation where in you put your personal assets at risk along with the business. Hire an experienced small business bankruptcy lawyer in MD and make the right legal moves.
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