When to Hire a Bankruptcy Attorney for Your Company

Four Financial Warning Signs to Look For

Running a successful business is a challenge on its own. To attempt the same venture in the current economy during a pandemic has made many Americans realize that their company might not be able to survive. This can be a tough pill to swallow as it essentially means admitting defeat, however, sometimes it’s better to fold rather than continue to gamble further on the bad hand that is your struggling small business. Since filing for bankruptcy is usually a once-in-a-lifetime occurrence, it can be difficult to know what circumstances warrant it. This has business owners asking, “When is the right time to hire a bankruptcy attorney for my company?”

Hiring a bankruptcy attorney is a huge decision and one that will change the course of your company’s future forever. It’s not only going to affect you, but the employees that work there and the customers that patronize it. A lot will change as a result of filing bankruptcy, however, it’s not always bad. Sometimes a bankruptcy is the smartest move a business owner can make from a financial perspective. It can also relieve the personal strain of dealing with creditors. If you’ve found yourself on the wrong end of a struggling business, here are the four major warning signs that it may be time to hire a bankruptcy attorney.

Your Debt Keeps Getting Larger

Can you imagine anything worse than paying on debt and the balance not going down? Imagine paying on debt and the balance you owe actually going up. This is a real-life situation that some companies and small business owners are dealing with. Typically, this happens when the debtor is making only minimum payments which aren’t covering the entirety of the interest they’re being charged with on a monthly basis. If this goes on for several months over multiple credit lines, you can find yourself at the mercy of your creditors and in a very deep financial hole you can’t dig your way out of.

Large amounts of unsecured debt that can’t be paid off (or continue to increase) are usually the first big indicator that you should seek the help of a bankruptcy attorney. Not only can your bankruptcy attorney get your creditors off your back, they can serve as your advocate to negotiate your debt so that it’s manageable to pay off as per a Chapter 7 or Chapter 11 bankruptcy filing.

You’re Drawing from Retirement and/or Liquidating Assets to Pay Off Debt

Retirement is a nest egg. It’s how we ensure that we can take care of ourselves down the road when we’re no longer able to work. If you are drawing from your retirement (or considering it) in order to pay off your debts, then it’s probably a good idea to talk to a bankruptcy attorney first. Although retirement funds may seem like a resource that can be used to keep your company afloat, drawing from it is usually a bad idea since you’re essentially taking money from yourself when you’ll most need it. Remember, at a certain age you’ll no longer be able to simply work or generate income. Your retirement funds are all you’ll have left, so it’s critical you keep those intact for later. The same case can be made for selling assets. If you find that you’re liquidating assets just to keep up with your creditors, then it’s only a matter of time before the well runs dry and you’re left with nothing. It’s best to bring in the help of a bankruptcy attorney sooner rather than later while you still have retirement and assets.

You Are Unable to Take Care of Yourself and Your Dependents

Your business depends on you in order to survive, but so does your family. Both of these things require time, money, and consideration; however, companies aren’t nearly as important as the ones you care for. If you find yourself in a situation where the financial obligations of your company and creditors are keeping you from being able to provide for your family, then it may be time to consult a bankruptcy attorney to see what your options are.

For instance, if you find that you’re drawing from family emergency funds or your children’s college tuition in order to keep the company afloat, this a huge warning sign that action needs to be taken before those accounts are bled dry. Much the same way you shouldn’t steal from your personal nest egg, you should keep your family nest egg and emergency funds intact as well.

You’ve Fallen Behind or Are Upside-Down on Your Mortgage

Mortgages are typically the largest financial obligation that a person deals with, and the same can be said from a corporate standpoint. If your company has fallen behind on its mortgage payments or is facing foreclosure, these are both warning signs that you should consult with a bankruptcy attorney to intervene. Filing for bankruptcy can put your company in a position to get caught up and/or eliminate the second mortgage/home equity loan. If you’re facing a foreclosure, your bankruptcy attorney might be able to negotiate you out of that as well, if given enough time.

Consult with a Bankruptcy Attorney Today

If any of these warning signs are familiar to you, then filing for bankruptcy might be the smartest financial move that you can make. The only way to know for sure is to set up an appointment with a bankruptcy attorney so that they can properly assess the situation. There are plenty of Denver bankruptcy attorneys in the local area who can review your company’s financials and give you sound advice on what your next steps should be.