Is filing bankruptcy a good thing to do? Many times it is. Given below are some of the main reasons why such percent of total population find themselves in a position to declare bankruptcy even when up and running alright.
The nature of having too much debt to creditors and other investors is a major reason for being declared bankrupt whether as an individual or company. Bankruptcy statistics indicate that at least 10 percent of the population in each county in Connecticut filed for bankruptcy petition in the year of 2014.
1. External business condition
Any business in the run encounters external frictions and encounters in most of its dealings. Some of the encounters and conflicts are good for business while others are not.
For example, excess competition in any business can be detrimental. One would ask, when does competition turn sour for any business? The correct answer would be when the competitor is totally filling you out, taking your clients, your chain of supply, and eventually filling your shoes in a better way than you do.
Lack of customers or clients is an easy way or rendering any business or company bankrupt due to loss of major income base.
2. Internal business conditions
Internal conditions mainly fall back to management. How well a person manages their finances determines how well they pay off debts in good time and how well they avoid the bad debt trap.
Consequently, a well managed company ensures all its finances are well controlled and the staff knows exactly which debt pitfall to avoid. Bad management in companies eventually leads to loss of clients and customers and thus lack of income which may lead to trade credit problem and eventually bankruptcy.
A business may also lack customers and clients if it is not strategically located. Location is paramount in considering a business premises and thus a hidden, insecure, or difficult to access location will scare off any potential clients or customers.
3. Mismanagement of finances
Everyone is susceptible to overspending or using finances in ways that do not generate more than is being used up. Such trends can lead to a financial rut that may include bankruptcy or that leads directly to bankruptcy. Most people in Connecticut rely on credit cards for shopping and purchasing any kind of services or goods, constant use of the credit card is number one factor that leads majority of people to bankruptcy due to excess debt and low payment.
The best way to handle finances is making a budget and developing a habit of sticking to it. However, if caught up in the bad debt you can look for the best bankruptcy advocate to help place your finances at stable levels.
4. Financing troubles
Poor financing, can occur through capital losses and lack of securing capital. In business a capital loss mainly occurs when a business person is not able to sell an asset at a better price than the one he bought it at, thus selling it at a lower price.
A case of bad debts is also a common constraint to securing capital since the debtor may take the bigger percent as his returns of any capital made, rendering a business bankrupt. Sometimes companies that deal with major investments and real estate businesses encounter huge capital losses when the value of the assets decrease or fluctuate seasonally.
5. Taxes
Failure to cooperate with the tax department has been an ever increasing reason why people and businesses are being declared bankrupt. It is therefore important you return and pay taxes in all forms on time and avoid compiling and skipping those monthly returns.
Many people across America are known to be wealthy in statistics, but a breach in tax payment renders them bankrupt.
6. Disputes with creditors
It is common to dispute with creditors to the point of them withdrawing in between projects or halfway through the contract. Such instances are highly likely to force a business or individual to file for bankruptcy or fall into other debts while trying to recover from the breach of contract.
Encounters with lawsuits also contribute in high percent to companies, businesses and individuals becoming bankrupt. In the case of lawsuits, a company may be pushed to sell off some assets to pay the lawsuits or secure money from other creditors. It is also common for some companies to close down before settling debts thus making the original lender have a deficit in the bank.
7. Personal issues
There is a line between personal issues and business; it is overly difficult to place the line at an exact point. Therefore, your personal life is most likely to affect your business and your finances as part of the package.
Unexpected health conditions are likely to halt the business running or alter the business to some point, thus losing the balance in finance management especially if the illness requires expensive medication and time.
In such cases it is important to voluntarily declare yourself bankrupt through the best bankrupt advocates for advice and cover against bad finances. Other issues like divorce and separations are likely to render an individual bankrupt especially if there are financial obligations to meet.
8. Calamities
Our country experiences many types of natural disasters, ranging from hurricanes, tornadoes, flash-floods and snowstorms. Business structures are likely to come down and collapse when such calamities occur.
The loss is usually high and almost unattainable on single income, and thus most companies source for investors and creditors who supply the company with money or assets. Failure to try and pay the creditors can make one bankrupt and have his assets sold off to the cover the cost.
9. Involuntary bankruptcy filing
Same as the case of having many creditors, a business or individual may be pushed involuntarily to bankruptcy if the creditors estimate your assets can easily pay off their debt. Therefore the creditors in this case push you to bankruptcy without your consent or wish.
The best advice any lawyer will give you is to pay debts as they come instead of waiting for a pile up to avoid involuntary bankruptcy filing.
10. Job loss or reduction in payment
Losing a job is difficult because it limits your chances of clearing off your debts, and this case mostly makes the debts accumulate even more.
Payment reduction can also lead to increased debts and constant use of credit cards that accumulates more debts as well. As an individual, you can voluntarily file bankruptcy after carefully studying Chapter 7 Bankruptcy this will help you understand the category you fall under.
So in most cases the decision is yours. Ultimately speaking with an attorney specializing in bankruptcy will be your best bet at obtaining a fresh start and doing so with the proper legal protection you need and the expertise to get you there.