Most people face debt and other problems due to economic and financial crises. If you are running a business then you will have a major problem on your hand if you are not financially fit to pay off any outstanding debts. Mostly people who go for bankruptcy as a last resort are unable to re-pay the loans they acquired by banks and other companies. Bankruptcy can hit your credit score in the long run and there is no easy way out to repair that sort of damage. Bankruptcy will result in foreclosure of your property, meaning you can lose everything that is of value.
You will never be able to take up or even be granted a single loan to run your business even after you have paid off all your debts. The bankruptcy status stays on the credit sheets for over seven years. It is always advisable to avoid going into bankruptcy and look for other means to pay off all the outstanding debts. A person can and is more likely to eliminate the need for filing for bankruptcy. This can be done by going into financial reorganization and money management. This could result in a hassle since most people are employed but not able to pay off debts when having a small salary. Same goes for local businesses. It is not likely to pay off debts of the business when it is not doing well and not generating enough income to support employees or repaying the bank.
History has a track record of people and companies that have filed for bankruptcy instead of settling their loans and payments. They have gotten bad aspects of their actions in the future and are unable to recuperate from bankruptcy. There are new bankruptcy laws, made by the Obama government, that offer more innovative ways to pay off debts. There are a few chapters and laws, take Chapter 13 bankruptcy. This is where the financial court allows you to get some financial help and go into financial reorganization. This way you can have a monthly charge to pay off your debts, then the court can distribute the money to all the companies your have gained a loan from.
That law is also classified as "debt settlement". Debt settlement has become very popular due to the government's rules and regulations. It is making it easier for people who are not financially fit to repay debt, before hitting rock bottom with bankruptcy. This has become a faster way to get rid of any outstanding debts, but keep in mind that there is a time frame. Most debt settlement cases are granted for a number of years, usually five to seven years. This is an ample amount of time to repay all your debts, but if for instance you are unable to do so you property could suffer. The collateral that you have put up as a security may possibly be seized and then sold to pay off the final amount of your outstanding debts.