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Because bankruptcy is considered a last resort there are strict guidelines for how many times someone can file for bankruptcy. There must be a six year gap before you file again.
Additionally, before you file for bankruptcy, make sure you research all your options. Filing for bankruptcy has a lasting effect of 7 to 10 years, so make sure that whatever decision you make is well thought out.
There are basically two types of business bankruptcy:
Chapter 7 Bankruptcy, or liquidation, meaning a sale of assets to satisfy creditors
Chapter 11 Bankruptcy, or reorganization, allowing a business to reorganize its debt structure without shutting the doors to the business.
The amount of debt that a company is required to pay will be based on the value of the business at the time of filing, the ability to pay, and willingness of creditors to accept delayed payments, expecting the business to eventually return to profitability.
Oftentimes because of the complexities and nuisances in the ever-changing bankruptcy law, anyone seeking to file personal bankruptcy or corporate bankruptcy, would be wise to obtain the services of a well-respected bankruptcy lawyer. This could save you not only time and money, but the exhaustion and anxiety in dealing with court proceedings on your own.
Do not let the "one-size-fits-all" kit from your local stationery store lull you into a false sense of security. Consult a professional! Your local bar association is one source of assistance in choosing a reputable bankruptcy attorney or find a good website that specializes in finding a lawyer.
Contrary to the stigmas of 20 years ago, bankruptcy is not all "bad." Bankruptcy can be an alternative to provide a fresh financial start for you, your family, or your business.
If you are in a situation where your debt load is simply overwhelming, perhaps due to a medical situation or business failure and you have considered other options, perhaps bankruptcy is your best option. Consulting with a reputable bankruptcy lawyer is advisable in making this determination.
A few requirements exist for permission to file personal bankruptcy which include:
* residing or having a place of business or property in the US;
* it's been at least six years since any previous Chapter 7 bankruptcy discharge or completed Chapter 13 bankruptcy plan;
* there's been no dismissal of any other bankruptcy action within 180 days;
* cannot be a "substantial" abuse of Chapter 7 relief;
* the action would not constitute a fundamental "unfairness" to grant the Chapter 7 relief.
For these reasons, it is strongly recommended that the services of a well-respected bankruptcy attorney be sought.
While this might be a euphoric thought for the average business owner who is behind in paying employment taxes, corporate bankruptcy does not eliminate tax obligations.
Business that find themselves upside down, so to speak, may find it valuable to consult a bankruptcy lawyer to decide how best to handle this type of situation with creditors and owing back taxes to the IRS.
Bankruptcy isn't the end of the world, but there are a lot more options out there if you're in financial difficulty. Call your creditors and explain your situation. More often than not they are willing to lower monthly payments and erase late fees. There are also lots of state funded credit counseling services that help consumers get back on track. Make sure you do your homework.