Business bankruptcies have been on the rise during the pandemic – even in places like Miami-Dade County in Florida where there were little to no restrictions on economic activity. If your business is struggling to stay in the black you are far from alone.
If you are considering filing for bankruptcy or pursuing a loan restructuring to get your business finances in order, you likely have many questions about the process and what it means for your future. Our experienced bankruptcy attorneys have the answers you need during a critical time for your business.
Debt Consolidation vs Bankruptcy
The idea of consolidating your debt probably sounds appealing on the surface, especially if you are concerned about any stigma associated with the word “bankruptcy”. Unfortunately, many debt consolidation agencies are frauds and debt consolidation lacks many of the benefits that come with bankruptcy or loan restructuring.
For example, your credit score will continue to take a hit during the consolidation process since you are not paying your debts. Settled debts can also increase your tax burden since they are treated as 1099 income. The consolidation process often takes years to complete, results in additional fees and provides no protection against lawsuits or judgments.
On the other hand, bankruptcy’s automatic stay puts an immediate end to creditor harassment once you file. You will also be protected from lawsuits or judgments during your bankruptcy, your discharged debts will not be considered as income for tax purposes, and the process can be completed in a number of months so you can quickly move on to the next phase of your life.
Still considering a debt resolution firm or debt consolidation agency? Do yourself a favor and make sure you check with the Better Business Bureau and all relevant consumer protection agencies in your area before signing anything or making any payments.