3 Signs Small Business Owners Need to Hire a Bankruptcy Law Firm to File for Insolvency

Law Blog

Several things including debts can make your start-up struggle to make ends meet. In such a state, it's easy for business owners to become confused about the next steps to take. You may not know whether to file for insolvency or not. Luckily, some signs can show you that your establishment is going under and that you should take drastic action to save it. Bankruptcy law firm lawyers understand the ins and outs of business law and can tell you whether it's a good idea to file for insolvency. This article highlights some instances that should make you seek their assistance.

You're Using Your Savings to Pay Business Debts

It's not unusual for startup owners to dip into their savings to keep their enterprises afloat. However, if you find yourself using them more and more to pay debts, it may be time to consult with a lawyer. If you fail to do this, you will plunge your finances into dire straits and your company will still be owing money. This is especially true if you're using credit cards to make ends meet.

A lawyer can explain your options and craft a plan to protect your assets as you pay your debts. They may also negotiate with creditors on your behalf to lower your payments or interest rates. If this option fails, they'll file for insolvency, giving you and your business a fresh start.

Your Business Is Unable to Generate Enough Revenue

To sustain your company, you need to ensure it generates adequate revenue to cover its expenses. These may include inventory costs, employee salaries, rent, and other operational costs. If your enterprise can't generate enough cash to cater to these expenses, then it might be insolvent.

A lawyer can assess your business's financial situation and recommend the best action. If its insolvency is confirmed, they'll help you file for bankruptcy. This process requires specialized legal knowledge which you may not have if you're not an attorney.

Your Business Is Constantly Borrowing Money

While borrowing money to finance your company's operations may not be out of the ordinary, constant borrowing may indicate that your company is in serious trouble. Taking out loans using your company as collateral can put it and your assets at risk, especially if you can't repay the debt. If you're struggling to keep up with loan repayments, it may be time to speak with a lawyer about your options. These professionals will analyze your company's financial statements and find out if you can stop borrowing. If this is impossible, they'll tell you the type of insolvency to file under.

Filing for insolvency isn't something to be trifled with. It's a major decision that can have lasting repercussions for your business. If you're considering this option, contact a bankruptcy attorney. They'll keep you from going wrong and take you through the legal process.


28 July 2022

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