Deciding to file for business bankruptcy in Newport Beach California can be a difficult decision. However, many times this is the best option for a business to get out from under its debts and for a business to form into a new opportunity with a clean slate. Some tips to help make the most of business bankruptcy in Newport Beach California include:

Learn which Bankruptcy Option Is Best

The two most common forms of business bankruptcy are chapter 7 bankruptcy and chapter 13 bankruptcy. Chapter 7 bankruptcy eliminates most forms of debt by liquidating the business’ non-exempt assets. Chapter 13 bankruptcy reorganizes the business’ debts and puts it on a payment plan. Chapter 13 bankruptcy can sometimes handle tax debts, unlike chapter 7 bankruptcies. A business bankruptcy lawyer can help advice which option makes the most sense for your business.

Get Advice before Filing

The steps that a business takes before filing for bankruptcy are important. While it may want to prioritize certain creditors, the bankruptcy trustee will carefully scrutinize these payments. If the trustee finds that preference payments were made, the trustee may try to take back these payments during the bankruptcy process. Likewise, businesses should avoid taking loans from family, friends or business associates in order to try to make it through rough financial times because these debts may wind up as part of the bankruptcy process. Additionally, an automatic stay is provided that can halt much creditor activity, so trying to make payments or take other action may not be what is best for the business.