Rare is the case where a business owner or an individual doesn’t know s/he’s in trouble and that filing for bankruptcy is an option. All too many people ignore the signs and wait until the last minute when the IRS is knocking on the door about to shut the business down, or the bank is minutes away from foreclosing on property.
If they’d only gone to see an attorney before things got so bad, they could take actions that would minimize the damage, and maximize the property the Debtor can keep.
So rule number one when you get into financial difficulty (you’re having trouble paying the bills or you haven’t paid payroll taxes or sales taxes) is to consult a bankruptcy attorney right away. A good bankruptcy attorney will first see if there are alternatives to filing bankruptcy, and if there aren’t will give you some thoughts about actions you can take in advance of a bankruptcy filing.
In coming weeks I will be discussing three planning opportunities a business can expect their bankruptcy counsel to consider. They are: the President’s compensation, the owner’s personal liability for some debts and the issue of exempt property.