If you’re a business owner considering filing for bankruptcy, it’s important to understand how this decision impacts your business. From potential legal issues to the impact on your credit score, there are many factors that you should consider before making a decision.
Here’s what you need to know.
Impact of Filing for Bankruptcy on Your Credit Score
One of the most immediate effects of filing for personal bankruptcy is its impact on your credit score.
Bankruptcy can remain on your credit report for up to 10 years. This makes it difficult to get financing or secure credit accounts in the future. It could be especially damaging if you decide to start a new business venture down the line or if you need money for your current business. Lenders take a close look at your credit history when evaluating loan applications.
Difference between Personal and Business Bankruptcy
In some cases, individuals who have filed for personal bankruptcy may be tempted to apply for business bankruptcy to protect their assets from creditors and avoid further financial trouble. https://www.thebalancemoney.com/what-is-business-bankruptcy-393017
However, it is important to remember that these two types of bankruptcies are treated differently by the courts and creditors.
Personal bankruptcy is only applicable to debts incurred as an individual. Business bankruptcy applies exclusively to debts incurred by a company or organization. As such, filing for business bankruptcy will not absolve any existing debt from personal accounts and vice versa.
Potential Legal Issues When Starting a New Business after Bankruptcy
Another key consideration when filing for bankruptcy is its future effects. If you intend to start a business in the future, the financial decisions you make now could play a role.
Depending on the type of business you wish to create, you may be required by law or policy to disclose any prior bankruptcies or debt issues that could potentially negatively affect your ability as an owner or operator.
In addition, certain lenders may refuse loans or other forms of financing due to your past financial issues. This is the case regardless of whether they directly relate to the new business venture itself.
Ultimately, deciding whether or not filing for personal bankruptcy is right for you requires serious thought and planning. This decision cannot be reversed and it has long-term complications.
Although it may seem like an appealing option to start fresh financially speaking, it also comes with its own set of risks and implications. They should not be taken lightly. This is especially true when considering how the decision affects your business now or any potential future business opportunities.
Before taking action one way or another, make sure you explore all available options. This allows you to make an informed decision about what direction would best serve both yourself and your business interests long-term.
For more information or to speak to someone who can help you protect your business if you’re considering bankruptcy, contact the Law Offices of Robert M. Geller at 813-254-5696 to schedule a free consultation with an experienced attorney.