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Should bankruptcy be seen as more than a last resort?

A recent article provided a checklist for businesses considering whether bankruptcy might be in their best interest. Yet is the analysis different depending on whether the filer will be an individual or a business? As a law firm that has helped both individuals and business owners examine their debt management choices, we see many parallels. 

First, bankruptcy should be seen as one of several options, not just as a last resort. In fact, it might even be the very best option, depending on the particular circumstances. In both the business and individual consumer context, accumulating more debts might be worse than simply deciding to file. 

A bankruptcy filing can also provide emotional relief, as the act symbolizes a concrete decision, perhaps bringing an end to months of deliberation. In addition, it provides a structure for the priority and way that various creditors or types of debt should be repaid, to the extent funds are available. 

An attorney can help an individual decide which type of bankruptcy will be the best fit. In a Chapter 7, someone with medical bills, credit card debt or other types of unsecured debt might benefit from the liquidation of his or her non-exempt assets. The proceeds will be used to pay off creditors, and the individual can start rebuilding with a clean slate. 

A Chapter 13, in contrast, might suit an individual who wants to avoid foreclosure of his or her home or other assets. This type of bankruptcy utilizes a repayment plan where the individual can reorganize and/or readjust his or her monthly debt payments. 

Source: Huffington Post, “5 of Our Favorite Tips for Dealing With Business Bankruptcy,” Nancy Laws, Oct. 9, 2015

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Goldman & Beslow, LLC is a Federal Debt Relief Agency by an Act of Congress. We have proudly assisted consumers seeking relief under the U.S. Bankruptcy Code for over 38 years.

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