Despite its increased use and benefits, there are still misconceptions about bankruptcy. This is perhaps most damaging when it comes to filing for bankruptcy as a small business. Owners may fear it will damage their credit, or that they will ultimately face closure if they file, so they continue to trudge through debt, possibly putting the future of their company at risk. If you are a small business owner in serious debt and considering bankruptcy, the following can help you understand the misconceptions about bankruptcy and assist you in deciding if it might be the right option for your company.

Understanding the Purpose of Small Business Bankruptcy

If you are considering bankruptcy for your small business, you are probably having a difficult time meeting your financial obligations each month. In fact, your company may already be effectively bankrupt. At the very least, it is heading in that direction. To ignore this is not only poor decision-making, but it could potentially lead to personal financial problems and the closure of your business. Bankruptcy could help you avoid such issues. In fact, some companies manage to negotiate the terms of their debts, consolidate, and pay off their creditors while keeping their businesses open and running. When used in this way, bankruptcy could be more of a benefit and less of a hindrance to your company’s future.

Is Bankruptcy the Right Option for Your Small Business?

Bankruptcy is not the best option for every small business. However, companies that are viable and have a future, as well as companies that may go under even after they file, could both benefit from a bankruptcy filing. If nothing else, this legal action may protect the personal assets of business owners or partners. Still, it is encouraged that you have your situation analyzed by an experienced lawyer before making any final decisions. After all, each situation is unique and should be treated as such.

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At Newland & Newland, LLP, we regularly publish blogs that provide people with helpful information about financial issues that may affect them. Whether we are looking at how individuals or businesses can file for bankruptcy, the process of buying or selling residential real estate property, or the options for homeowners who are facing foreclosure, we want to let people know how they can address their legal concerns. We wanted to highlight some of the blogs that were most popular with our readers in 2020:

1. What is Chapter 22 Bankruptcy? - While “Chapter 22” is not an official part of the bankruptcy code, it is an informal term that may be used to describe a situation where a company has filed for Chapter 11 bankruptcy for a second time.

2. How Do I Get Information About an Illinois Bankruptcy Case? - We offer information about how to access public bankruptcy records.

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A judge has granted a $5.2 billion plan to Sears chairman and shareholder Eddie Lampert in an effort to keep the business going. Lampert's plan managed to overcome opposition from creditors, including suppliers and mall owners, who pushed to block the sale and liquidate. Even with this reprieve, the long-term survival of the decades-old company remains in question.

Lampert has yet to offer any specific plans, although Sears faces stiff competition from Amazon, Walmart, and Target. The company filed for Chapter 11 bankruptcy protection last fall. Any time a Chapter 11 bankruptcy is filed, it often makes the news because this bankruptcy is used by large corporations when they fall into financial trouble. Other corporations, such as United Airlines and General Motors, have also filed Chapter 11 Bankruptcy in recent years.

Who can be a Debtor in a Chapter 11 Bankruptcy and How Does a Case Start?

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When your paycheck is garnished by the either the Internal Revenue Service (IRS), the Department of Workforce Development, or the courts, it can wreak financial havoc in your otherwise stable life. Furthermore, becoming gainfully employed should you lose your current job will be nearly impossible. Although, according to law, employers are not allowed to discriminate against an employee suffering from wage garnishment, disclosing that information on an application before you are hired may raise red flags. On the other hand, if you lie about your wage garnishment on an application to your employer, you could suffer consequences for not being honest.

Ignoring outstanding credit card debt, receiving overpayments in unemployment insurance due to fraud or failure to report earnings, owing back taxes, and unpaid child support or alimony payments can all lead to a wage garnishment. As a result, many people are often embarrassed by the negativity attached to a garnishment and will refuse to seek professional help with their financial situation. Others may feel hopeless about their situation and believe that there is actually no help for their problem. Realistically speaking, ignoring your financial situation may or may not have been the reason that you are suffering from a garnishment to begin with. However, you can stop your wage garnishment and end your financial suffering.

How can I Get Help With My Garnishment?

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Traffic ticket prices have skyrocketed in Chicago since Mayor Rahm Emmanuel agreed to spike citations from $120 to $200. Statements from the mayor say that the surge in traffic citation prices will bring $16 million much-needed dollars to the city of Chicago. However, the citations managed to only generate a few million dollars and forced thousands of already disadvantaged residents into filing for bankruptcy to cope with the debt. As a result, unpaid traffic citations have contributed to an explosion in Chapter 13 bankruptcy filings in Chicago. Collectively, drivers owe $275 million dollars in traffic tickets since 2012. In an effort to fight back, residents filed a class-action lawsuit. The lawsuit alleged that the price of traffic citations exceeds the state cap of $250 per ticket.

What Does it Mean to File for Bankruptcy?

Bankruptcy is designed for individuals who are overwhelmed with debt and cannot find a way to pay. The right to file for bankruptcy is provided by federal law and is given to all persons. Filing bankruptcy immediately stops creditors from seeking to collect debts from you until your debt is settled as according to the law. For instance, filing for bankruptcy in Illinois can:

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