Bankruptcy? Don’t Get Messy With It
Despite the serious short term and long-term effects associated with filing bankruptcy, the number of people filing bankruptcy lately has been on the increase. It is estimated that 5.4 people out of 1000 filed for bankruptcy last year and that this rate has been growing at an average of 7%. The alarming ease with which people file for bankruptcy is a growing cause of concern for governments and financial organizations.
What is Bankruptcy? The word, Bankruptcy, means ‘broken bench’, literally. In the past, during the early days of banking and trading, when a debtor could not pay off his debts, his workbench was broken into two as a punishment and also as a warning for other debtors. But in recent times, the term is now used as a legal tool to help an individual or business discharge its burden of debts without been swallowed up by it. It is now a legal term, meaning that an individual cannot, within reason, pay off his various debts and has allowed the court system to take over his finances for the purpose of easing off his debts.
Bankruptcy laws were enacted in order to protect both debtor, and creditor. The laws were enacted to provide equal and fair measures to satisfy the objectives of all parties. The primary purpose of the laws of bankruptcy can be split in two:
- To give an honest debtor a fresh start in life by relieving him most of his debts
- To repay creditors in an orderly manner to the extent that the debtor has property available for payment.
Bankruptcy – is This Your only Way Out?
What is bankruptcy, and how does it affect you?
The term bankruptcy literally means “broken bench”. In days gone by, when a debtor couldn’t pay his/her bills, they would break his/her workbench in two as a warning to other tradespeople and to punish the debtor.
Today, bankruptcy is a tool that can legally help your business to survive or allow you to discharge the debts of your business.
Are your business debts overwhelming you? Are you worried about how you’re going to pay your staff and bills next week? Are you seriously starting to think about bankruptcy as a possible solution to your woes? Well, before you take what is basically an irreversible step, be totally clear on what bankruptcy is and how it affects you for now as well as long term.
Bankruptcy is a way of dealing with the debts you cannot pay. It should only be looked at by you as the business owner in a situation where you have made every effort to keep your business floating and pay your creditors, but without success.
Only contemplate it when you believe that you cannot meet your ongoing financial liabilities and you are sure your financial position is unable to be salvaged. Becoming bankrupt is a very serious decision and you must only approach it as a last resort.
If your business is in danger of heading into problems that could lead to its demise, or your financial worries are such that it may lead to your business or personal bankruptcy, then seek urgent advice from an experienced lawyer and accountant as soon as possible.
Why?
Because there may be other options available to you that would avoid bankruptcy and help resolve your financial dilemma.