Things to Avoid When Filing for Business Bankruptcy in TexasDallas Legal News
If you decide to go through with a business bankruptcy, you might be making one of the best choices for the future of your business, for your family, and most of all, for yourself. If you decide that this is the option that will help you get rid of your business debts, it is important that you know the steps that will help you get there and the steps that you should never take. Today, we would like to focus on some things that you should avoid when you are filing for business bankruptcy.
Aspects You Never Want to Do When Filing for Bankruptcy
Avoid Preference Payments: If a friend or family has lent you money, you might try to repay them. However, this is not a good idea because a trustee in your bankruptcy will take a look at all the payments you made before filing to make sure that certain people were not given preference, known as preference payments. The trustee might then attempt to take back these payments so that it doesn’t make it unfair to other creditors who have not been paid. They will instead use them and divide them evenly amongst all of your creditors. Under the law, you are legally permitted to pay one unsecured creditor ahead of the others as long as they are not somebody who is personally close to you such as a close relative or somebody that you work with.
Never Borrow from Friends or Family: If you borrowed from loved ones, you will not be able to pay that money back. This is because the bankruptcy court will attempt to classify their loan as a “gift” and not a loan, which is treated much differently under the law.
Never Pay Yourself a Bonus: Many people will attempt to pay themselves a bonus or back pay as a way to keep some money for themselves. However, it will be considered recoverable when preference payments are considered. This is true for any type of money that is taken out of the company during the 12 months before you actually file for bankruptcy. They might even see you as stealing and consider it bankruptcy fraud, which could come with criminal penalties.
No Shopping Sprees: When some people realize that bankruptcy is going to happen no matter what and that they can’t avoid it, they might grab the cash they can and go on a shopping spree before they file business bankruptcy. However, the bankruptcy court will assume that you have attempted to defraud them and this will not work out for you.
Avoid Cash Advances on Credit Cards: Do not take out a large cash advance on a credit card before you decide to file. The credit card company will believe that you were attempting to defraud them and have no intent to pay them back.
How a Texas Bankruptcy Attorney Can Help
At M.J. Watson & Associates, our experienced business bankruptcy attorneys understand what you are going through and how difficult it can be to move forward at this time. When it comes to your business needs and the inevitable realization that bankruptcy is the way to go, you will need an attorney on your side to help you through the bankruptcy process and gain the results you deserve. Please reach out to us for more help with your case at (214) 965-8240.