Individuals and businesses who find themselves swimming in debt often think that bankruptcy is their only option for resolving their financial problems. It’s not the only choice that they have, though. Businesses can consider receiverships, compositions and assignments for the benefit of creditors as alternatives to filing bankruptcy. Each of these options carries with them various pros and cons.

A receivership is a process by which a creditor, or receiver, takes over the debtor’s property under the court’s supervision. The entity that takes over the property can use their discretion to decide how they proceed once this happens and up until the court decides how to best dispose of the debtor’s property. They may choose to either run the business as their own, cease operations or liquidate the property they receive.

Debtors also have the option of agreeing to a composition with their creditors. The latter will generally agree to accept an amount lower than the original loan to remove a debtor’s further liability for the debt. Creditors who wish to collect the full debt may decide against a composition. They may instead attach the debt to any assets the debtor may have.

Assignments for the benefit of creditors involve a debtor transferring the majority of their assets to a credit managers’ association or adjustment bureau trustee. That individual would then sell off those assets and distribute any proceeds from the sale to creditors in a predetermined manner. Not all creditors have to agree with this process. If a business’ assets don’t sell for their full value, then a debtor may owe the remaining debt. Most jurisdictions’ laws allow debtors to request releases in such instances or prohibit creditors from claiming an outstanding balance.

It can be hard to think straight when you have creditors calling you or sending you letters all the time about your Austin company’s outstanding debts. This endless communication back-and-forth can make deciding between debt-relief options quite tricky. An attorney can help you sort through the different options you have available to you in Texas so that you can move on with your life once again.