In cases like this, it’s best to consult with a lawyer before you get the new loan so the lawyer can review the tax issues for you.
The negative credit rating will affect your ability to get new credit down the line, at least until the bankruptcy is removed from your credit report.
It takes 10 years before bankruptcies are removed from credit reports so discovering all your options when it comes to a business debt is the optimal path to go on.
Separate legal entities, such as corporations, operate under special bankruptcy rules.
The legal entity may be able to file a Chapter 7 in which the business is essentially dissolved and the assets are sold to pay the debts.
For instance, if a business owner is behind on multiple debts, just combining those debts into a larger payment may not improve the situation unless they can renegotiate the terms.
Advantages of bankruptcy A bankruptcy creates an automatic stay which means the debtor can focus on the finances instead of calls and letters from collection agencies and/or legal actions by creditors. the debtor does not gets a fresh start like they do in bankruptcy.
In the latter two cases, the debtor also has to shop around to find the right lawyer and an honest and skillful debt collection service.
The advantage of using a lawyer who helps businesses with debts, or a service is that they’re more inclined analyze your debt situation objectively and they will also most likely have better contacts for arranging a new longer loan term.
There are two main terms that can be better: Debt consolidation can be arranged by the debtor himself/herself, by an attorney or by a debtor consolidation service.