It may be better to file for bankruptcy sooner rather than later

On Behalf of | Jul 23, 2020 | Business and commercial bankruptcies |

The world has changed a lot this year. If you own a small or medium-sized business in Austin, things may be looking bleak. 

Six months ago, bankruptcy may never have crossed your mind. Now it may be a real possibility. Yet, if you have worked hard to build up your business, your pride may hold you back. You have probably overcome difficult times in the past, perhaps including the big recession of 2008 and may think you can do it again. However, we are living in very different times.

Experts are predicting it could take years to recover from the current situation. So you need to take a long term look at your financial future. Failing to do so could lead to more trouble than admitting defeat now. Here are some reasons you may wish to declare bankruptcy sooner rather than later.

  • Increasing debt: Every day longer you hold on to a loss-making business, the deeper you sink into debt. You may be tempted to take out a new loan or sell assets to come up with a cash injection, but if the future is uncertain, this may not be wise.
  • Dwindling clientele: You are not the only business who is struggling. Thousands have closed across Texas and the world. Many people have lost their jobs. So, there is probably a much smaller demand for your product than before. You cannot base your economic forecasting on the past.
  • Less loss of trust: No one will think badly of you if you have to close your company. In normal times your creditors may have been reluctant to do business with you ever again. This time, they know it is not your fault. You may be able to rekindle those contacts in a different business relationship if you close your current business before your debt to them gets too big.
  • Restrictions will end sooner: A bankruptcy may affect your credit rating and restrict your ability to start a new business or take senior roles. The sooner you do it; the sooner restrictions will be lifted.

To learn more about bankruptcy options for your business, contact an experienced Austin business bankruptcy attorney.