Filing For Bankruptcy The Last Resort For Debt-ridden Wholesale Suppliers

Just imagine the setback you get when you have no other option than to surrender your business assets to your lenders

. Yes, this is exactly what you do when you file for business bankruptcy. When wholesale suppliers are unable to manage or repay their debt after receiving multiple threatening calls from various lenders, they are left with no other option than to file for bankruptcy.

Bankruptcy is a legal acknowledgement on the part of suppliers that their firm has become insolvent and they are willing to discontinue selling Wholesale Products. In short, bankruptcy is a death sentence for a wholesale business.

What Leads to Business Bankruptcy?

Financial mismanagement on the part of wholesale suppliers is the very reason why many wholesale suppliers despite having growth potential in their business have to apply for business bankruptcy. However, following are some of the mistakes that lead their firm to go for this option.

1.Taking excessive debts with less repayment capacity

2.Securing new loans to repay the old ones

3.Implementing wrong financial management strategies

4.Taking wrong financial decisions on wrong advice

5.Consistent delay in paying loans instalments

Business Bankruptcy The Last Resort

Bankruptcy should be the last option to avail, since its disadvantages outnumber its advantages. If wholesale suppliers are facing difficulty in managing their large amount of debt, they must go for other options before filing for bankruptcy i.e. using their fixed deposits to repay loans, selling off a few business assets, hiring services of some debt restructuring firm, proper cash management and dramatic downsizing.

Why bankruptcy petition should be filed as the last resort? This is because bankruptcy is never a favourable option since it leads you to stop selling wholesale products and eventually shut down the business. Though bankruptcy gives a temporary relief by discharging all the debts of a wholesale supplier yet many wholesale suppliers face more serious financial challenges after filing for it. Some clear reasons why you should file for bankruptcy as the last resort are explained here.

Impacts Credit Report Once the firm is declared bankrupt, the declaration badly destroys the credit score of a wholesale supplier. Depending on the type of bankruptcy, the effect of bankruptcy remains on the report for 7-10 years. This badly affects the future business borrowings of a supplier. Moreover, bankruptcy charge is irreversible which means once the firm is declared bankrupt, it cannot repay its debt later on.

Lowers Credibility Bankruptcy lowers the credibility of wholesale suppliers which affect them in several ways. Whenever, they apply for a job, need bank credit again or start another business, they need to inform the relevant parties about their bankruptcy. They face difficulty in securing a good job and obtaining insurance. This social discrimination along with the feelings of guilt and failure also add to the mental as well as physical stress.

High Bankruptcy costs In bankruptcy proceedings, wholesale suppliers needs to hire trustee as well as financial counsellors. The expenses of hiring them along with the fees of court, administrative costs and cost of drafting documents required to initiate bankruptcy proceeding, the total cost of filing for bankruptcy becomes quite high. These costs, at the time when wholesale suppliers are already neck deep in debt, further add to financial miseries.

Ends the source of Income Bankruptcy leads the business to its end and snatches the source of income from wholesale suppliers. Even if they intend to start another venture from borrowed money, the fear of another bankruptcy haunts them. This is because in certain states, another bankruptcy petition cannot be filed within six years of the last bankruptcy. No source of income sometimes also results in relationship problems like divorce and marital breakdowns.

by:

POST COMMENT

Our Bankruptcy Professionals Are Able To Assist Filing For Bankruptcy Look Before You Leap Tacoma Bankruptcy Attorney Can Help Stop Wage Garnishment How A Chander Bankruptcy Attorney Can Help Reduce Your Financial Constraints Benefits Of Filing Bankruptcy With A Lawyer 5 Bankruptcy Terms To Be Familiar With Hiring A Bankruptcy Lawyer - How Much Does It Cost? How To File Chapter 7 Bankruptcy Chapter 7 Attorney: Moving Past Bankruptcy Find An Appropriate Bankruptcy Attorney Detroit Knowing More About What A Bankruptcy Lawyer Does What To Consider When Selecting A Bankruptcy Lawyer Hiring A Competent Bankruptcy Attorney