What is business bankruptcy

What is business bankruptcy and how to avoid business bankruptcy

Lesson Details:
April 27, 2020

Video Transcription: So you have a really deep expertise in business bankruptcy and I bet you can talk about it for a whole day but just give us like a little bit of an overview like what the heck is exactly this business bankruptcy and are we as business owners like at risk or who is at risk or how do we avoid this or this video is brought to you by Appy Pie’s Academy it's such a big scary word bankruptcy nobody wants to even contemplate it it's not fun I enjoyed the practice of bankruptcy because you can take people who are in a bad position and put them in a much better position so that part's good but you know when somebody's sitting in your office when your bankruptcy attorney they'd rather be anywhere than with you and fair enough I mean it sucks so the goal is always to avoid bankruptcy but it's awful to know what it is and kind of you know when it might be applicable so bankruptcy is really it's it's the federal government saying you get to get out of jail free so some something has happened and it's gotten to the point where it's kind of out of control there's there's too much debt there's not enough income and and you need you need a fresh start so there's two ways when it when is a business bankruptcy where an actual business goes through bankruptcy those are chapter 11s that's like when United Airlines and you and you hear about all these big companies file bankruptcy those are chapter Elevens they're super expensive I mean just to even start talking about a chapter 11 you're gonna be writing a check for thirty forty thousand dollars with an attorney it's a big big deal it's a big big process most businesses when they're in trouble don't file a bankruptcy at all they just close they just closed which is brings us to the second kind of bankruptcy which is a personal bankruptcy which people don't really think of so much when they think of business but because most people are so intimately tied with their business and there's a lot of personal guarantees that have gone on a lot of types of business closure will force a personal bankruptcy it's kind of like you see in divorce if people get divorced if there's some money trouble a lot of times that'll force them into bankruptcy too because what you really need is you need then a personal Fresh Start because if the creditors can't collect from your business now your business doesn't exist anymore they're gonna start looking at you so and depending on you know if it's something small then it might not be a big deal you know that's five ten grand maybe you just you know you started another business you get a job whatever you pay it off you move on but a lot of times it's like a commercial lease so let's say you had a retail location that could be a couple hundred thousand dollars do you know if you - maybe your lease on a on a commercial location at five thousand dollars a month that's that's gonna be a big deal if you owe back taxes if you owe any employees money if you have a line of credit you know all that stuff that stuff will force you personally into a bankruptcy that's why financial savvy is so important because people start businesses and they're just doing anything they can to get the business started so there's pulling money from anywhere and they're signing anything and then when something happens it just takes down everything so it's it's pretty brutal generally what happens is the business will fold and the business owner I mean we have to look at how we're getting you out of this so are we filing bankruptcy are we going to do some debt negotiation what are we going to do to let you move on really.

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