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What Is Business Bankruptcy And When Should It Be Used?

Bankruptcy can be a process that will help your company repay or eliminate its debts under the protection of the bankruptcy judge. You can file bankruptcy to protect yourself from creditors' harassment and have some of your debt discharged. If you want to get more information about business bankruptcy, you can visit this site.

It allows struggling borrowers to reduce their losses and reorganize their finances. Business bankruptcy can be described as liquidation or restructuring, depending on what type of bankruptcy is required.

When a business cannot pay its bills, it becomes bankrupt. A company can declare bankruptcy if it is unable to pay its creditors. Most cases are not likely to be successful because the company's financial situation is so bad that it cannot pay its creditors. 

A business should file for bankruptcy, rather than wait for creditors to impose involuntary bankruptcy. Their job is to collect your assets and finances and distribute them to creditors. 

You may be allowed to keep some or all your assets in certain cases. You can keep your home, 401K, and IRA as well as pension and cash value life insurance money, free from bankruptcy. 

After the assets have been distributed and the trustee has been paid, the business owner gets a "discharge" at the closing of the case. A discharge is when the business owner is free from any debts. A discharge is not granted to corporations and partnerships.