Small Business Bankruptcy
Audio version available here:
Length: approx. 1 min. 10 sec.
In 2019, Subchapter V was introduced to Chapter 11 of the US Bankruptcy Code to give small businesses a more “cost-effective way” to “reorganize their debts” and recover. Due to its simplicity, many small businesses have used this tool to file for bankruptcy. However, filing for bankruptcy may not be the best solution for all small businesses facing financial difficulties.
Some business owners use a merchant cash advance to help with short-term financing. This method is risky if their business is already in deep trouble and can cause more distress. Meanwhile, funding with personal assets, such as retirement savings, is another known method of how small businesses stay afloat, but pulling personal money is unwise as it will deplete necessary funds for the future.
Bankruptcy itself has risks. Filing for bankruptcy could end up negatively impacting your credit, potentially making it difficult to take out any future loans. In addition, personal details that you may not wish to share could be publicly exposed.
With all this in mind, bankruptcy should truly be considered as a final resort to business owners in financial distress. If you are thinking of filing Chapter 11 to get out of your debt, we encourage you to reach out to our team of experienced professionals at XQ CPA. Click or call today to schedule a consultation. We are here to help.
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