If avoiding the virus wasn’t enough, what does the prospect of filing bankruptcy during the pandemic feel? The COVID-19 crisis continues to affect the lives of many, including the wellbeing of small businesses across the country. Unfortunately, there is no such thing as bankruptcy protection. Your business’ wellbeing isn’t personally guaranteed by any government official.
Despite the funds in place for small businesses as part of the economic response plan, approximately 15,000 small businesses are asking the federal government to help them endure the coronavirus. Otherwise, many local entrepreneurs and their employees will go without income indefinitely.
If your small business is struggling to make debt payments or keep up with wages, you may be considering bankruptcy. People file bankruptcy every day, but the pandemic is becoming one of the largest drivers in recent months.
Consider the following before you file for a small business bankruptcy.
Should you file for Bankruptcy? Here are three tips.
If you have trouble with your cash flow or if you have an excess of credit card debt, bankruptcy might seem like its just around the corner. Here are three tips for small business owners who are considering bankruptcy during the pandemic.
Stop for a moment and take a deep breath
While your business is a very important aspect of your life, try not to let the fear or anxiety of the moment get the best of you.
Panicking is a natural response to possibly going out of business. But occupying your mind with the negative takes up a lot of energy you can be using to find solutions.
Small businesses are at a disadvantage when it comes to this pandemic because many do not have enough money in the bank to continue paying overhead and payroll. Even with the funds available from the response plan, many owners fail to see a way out.
But that doesn’t mean you should make a rash decision.
Small businesses may jump to think about filing bankruptcy. However, the best answer is to avoid it as long as you can. Because this may be the beginning of a crisis, there’s no telling what hardships await you in the coming days, weeks, or months.
Mentally and strategically prepare yourself before you begin contacting your creditors. Your bills aren’t going anywhere.
Talk to at least three bankruptcy trustees
Once you regain your composure, speak to several bankruptcy trustees. Talk to various experts in your area who can apprise you of your options.
Learn as much as you can from each of these individuals without signing any agreements. Gather expert advice and begin formulating loose plans. If you do end up having to file a bankruptcy because of the coronavirus pandemic, you will at least know whom you may want to work with.
Educating yourself is the most important thing you can do right now. Talking to a trustee can help you decide which type of insolvency you may file and what the future of your business looks like.
You do not have to decide on the day you make calls and queries. Just find answers to some of your biggest questions and see how you may be able to navigate the terrain.
The worst thing you can do is make an uninformed decision. If you have to file bankruptcy, there will be plenty of time to do so.
Wait until the last minute
Waiting until the last minute is not typically sound advice. However, when it comes to your business possibly closing forever, waiting is something you must do to keep your organization standing.
You don’t want to file until you absolutely have to because there’s no predicting how long the virus and its economic consequences will last.
Even if a creditor sues you, you may still be able to file bankruptcy and put a stop to the legal proceedings. Despite it appearing simple in black and white, the process will neither be fast nor easy.
If you’re having trouble with your personal or business finances, speak to one of our trained credit counsellors today.