Take action now before declaring bankruptcy

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Act now to stop from declaring bankruptcy

In the position of you’re owed a substantial amount you’re not able to pay, or are in arrears with your mortgage payment, in danger of losing your home or receiving calls from bill collectors, or one of these options, filing for bankruptcy may be the best choice as https://bankruptcyhq.com/ notes.

In certain situations, you can reduce or eliminate your debts, secure your home and keep creditors away. However, it could cause serious consequences, like the damage in your score. This, in turn, could hinder your ability to obtain loans in the future. This could also raise costs for insurance and make it harder to find employment.

Federal stimulus funds that are used to aid struggling companies during the COVID-19 pandemic have thus been unable to file bankruptcy applications – but they could soon come towards an end.

As federal funds and commercial loans begin to become drained, bankruptcy filings will likely to increase by the beginning of 2022, after having fallen lower than average this year and particularly among those in the fields of auto, health and hospitality industries.

This should not come as a surprise since our recovery is in its beginning stages. The worldwide shortage of chips which is causing a slowdown in the production of computers, automobiles medical equipment, and other electronic devices is expected to persist for at least until the middle of 2022.

Banks are likely to begin taking action against bad loans as early as the beginning of this year. Whatever the case, already struggling companies will be slapped even more as many find themselves in hot water when it comes to cash flow problems.

Four steps before filing

In the case of many of these businesses it is not an issue or “if” it’s “when”. The positive side, however, can be found in the some things companies can take now in order to be better prepared to be able to survive a bankruptcy restructuring. The earlier a company can begin to make a right turn and get it back on track, the quicker it will come out of financial hardship.

If a business finds themselves in the process of filing for bankruptcy, a forbearance arrangement with the lender makes complete sense. In this arrangement the company will have the time to address its financial problems and then return to a payment plan that is acceptable for the lender.

When approaching banks regarding the possibility of forbearance, companies should think about the following steps to prepare to file bankruptcy. They include:

  • Pay for the major expenses, like pension contributions, taxes and other obligations due to key suppliers that you’ll require to pay in bankruptcy. Be up-to-date with state and federal taxes in order in order to protect yourself from personal responsibility in the event of the non-payment of taxes.
  • Consult with your accountant to ensure the financial data you have is accurate. A complete financial report such as projections, is crucial for every bankruptcy and turnaround.
  • Employ experienced experts. Think about hiring an experienced financial advisor who will assist you in drafting a plan and prepare projections that reflect the financial position of your company and re-establish the relationships with the lender. Consult with an attorney who is focused on restructuring and bankruptcy to make sure your financial plan is compliant with the legal requirements and helps prepare your company for the future.

Through the entire pandemic, we were reminded of the reality that we are living in a globalized society. We’ve experienced first-hand how problems faced by companies that produce an item or component can throw everything in the chain of supply into disruption. This is evident in the form of shortages of raw materials and supply chain rumblings as well as traffic jams at our ports, and other problems.

With the right strategy and professional guidance companies that are struggling can overcome this difficult time and emerge better with bankruptcy protections that can help restructure debt and prepare the business for future growth.

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