We have all heard of the term “going bankrupt” and of companies and businesses “declaring bankruptcy” and we all do have a basic understanding of what it entails, but not all of us truly know what it means. 2020 specifically has been a tough year for businesses, and many of them did end up declaring bankruptcy. Of course, declaring bankruptcy is a very huge decision, and it should never be taken lightly. If you happen to be a business owner and have been struggling to sustain yourself as a business, then you might have to opt for get out of debt bankruptcy filings, but again, you should not make this decision without consulting a proper bankruptcy lawyer.
Filing for bankruptcy means that you are publically declaring that your business is not generating profit, and because of this you are unable to pay your loans and debts. Once you have filed for bankruptcy, a court will declare a stay order for you which will prevent creditors and debt collectors from contacting you, and then, depending on the type of bankruptcy you have file, lead to debt exemptions for you. Of course, this sounds like an idealistic way to get out of having to pay debt, but it can have serious consequences for you long-term. Your credit cards will immediately get cancelled, and then your credit score will go down, and bringing said credit score back up will take a lot of work. One more issue you will face is banks not wanting to give you any further loans and this will happen because the bankruptcy filing will go on your permanent record, and banks will, out of precaution and fear, not want to loan you money since you will be viewed as a risky person to approve a loan to, so make this decision after a lot of deliberation.