The Advantages of Bankruptcy
When people discuss bankruptcy, it’s almost always with a negative connotation. They see it as a failure, as something to lament. But what about its advantages? When handled properly, it can be the first step along the path to financial success. Wouldn’t the greater failure be to not declare bankruptcy, and continue in a unsustainable financial condition, making no progress toward solving any problems? As Bobby Kennedy said, “Only those who dare to fail greatly can ever achieve greatly.”
Benefits of bankruptcy for individuals
As an individual, it offers you a way out of crushing debt. It is no doubt difficult, but will get you back on the road to financial stability.
Benefits for businesses
For a business, there are essentially 2 types of bankruptcy available:
- Chapter 7 – A chapter 7 filing liquidates a business. The main advantage of a chapter 7 bankruptcy is that once it is done, you are free to move on and start a new business, free of any burdens from the previous one.
- Chapter 11 – A chapter 11 filing allows a business time to reorganize its affairs so that it can become profitable once more. A business emerges from chapter 11 lean and ready to make money.
For an example of how a chapter 11 filing can give a business some much needed breathing room, take a look at Payless ShoeSource. Earlier this month, the company emerged from chapter 11. When interviewed by Morgan Chilson of the Topeka Capital Journal (Payless is based in Topeka), their CEO had this to say, “We had two major tasks to accomplish… The first was to reset our debt load, and the second was to reset some of the operating costs of the business, and most importantly, the occupancy costs of a very large store fleet. We accomplished both of those in spades.”(1) For more information on chapter 11, check out our chapter 11 page.
If you’re facing bankruptcy, you need an experienced legal professional on your side. Don Harris is currently the only attorney in New Mexico certified in both consumer and business bankruptcy law by the American Board of Certification, and he has over 25 years of experience. Give us a call or use the contact form to set up a consultation or get your case started.