If you’ve decided that commercial bankruptcy is the best solution to rid your business of its debts, you’ll need to avoid several common mistakes. Even if you end up not needing to file for commercial bankruptcy, avoiding these missteps can also benefit your business in the future.
- Making preference payments to creditors – If a friend or a business associate you’ve formed a close partnership with has lent you money, it may be tempting to pay them back before making payments to your other lenders. However, this is a bad idea because when you file for commercial bankruptcy, your credit payments will be closely scrutinized to make sure that some of your creditors weren’t given an unfair advantage over others.
- Borrowing from friends and family – When your business is facing commercial bankruptcy, your friends and family members may be willing to provide you with a loan, so you can avoid filing. While this is a nice gesture, your loved ones will not be able to get their money back if you do end up going through the bankruptcy process. If one of your friends or family members insists on giving your business funds, make it clear that they may not be repaid.
- Treating yourself to a bonus – If you give yourself a bonus or repay a loan to yourself that you made to your business before filing for bankruptcy, you may be found at fault for bankruptcy fraud.
Before filing for commercial bankruptcy, we can advise you regarding other mistakes you should avoid so your business has the potential to recover. Contact us today at Morgan and Partners Inc. for more information.