Coronavirus downturn: Considering filing for bankruptcy? Here's what you need to know.
"If you have to file bankruptcy right now, it's a badge of honor, you're not you shouldn't shame yourself," said attorney Jim Baer, a bankruptcy expert.
LOS ANGELES (KABC) -- Many business owners are considering filing for bankruptcy as a possible option. Is it a good economic move or could it come back to hurt you later, if you file now?
Bankruptcy attorney Jim Baer, founder and CEO of CMBG Advisors, Inc., joined ABC7 to give us his perspective.
Bankruptcy attorneys are preparing for an onslaught of filings, but what are the alternatives?
There's three things to do to get through this. First of all, to recognize there always is a way and that your doubts are your traitors. The second thing is to ask for help. There is a world of experts out there that have been preparing for this, that knew we were gonna hit a bump. No, no one expected a pandemic, but they were preparing for this, that can answer your questions. And then, the third thing is to get a team and put it together, develop a plan and take action. The most important thing to remember is you're not helpless and to take action after you develop a plan.
Less than half of eligible Californians have received their stimulus checks, IRS data shows
How do you know if you should try and negotiate with creditors or file for bankruptcy? What types of bankruptcy filings are there?
There are reorganization filings, there's filings where you liquidate, there's something called an assignment for the benefit of creditors, which is available under California law as an alternative to bankruptcy. Creditors in these situations because everyone is challenged - this is an example we're having your business survive and recognizing we're all in this together is the key. Over communicate with your creditors. They know your're not their only creditors. They know there are other people in the world of hurt and you are worth more to them as a thriving business, then going out of business. So, this is not like the Titanic where there weren't enough life boats. We have the resources of the most powerful country in the world, we can get through this. And the key is to work with your creditors and explain to them that you have a plan and that you will get them paid off in whole or in-part. And not for them to panic either because remember we're all afraid right now because none of us have lived through something like this.
What are the long-term implications of bankruptcy and is it going to hurt people if they want to start another business?
For two reasons it's not going to hurt you long-term. There are studies that have been done that if you are a person that has filed bankruptcy, you actually have an easier time getting a personal credit card because there's laws that say once you file, you can't file from a certain amount of time and they've already done the determination you're a better credit risk. If you have to file bankruptcy right now, it's a badge of honor, you're not you shouldn't shame yourself. We're all going through challenging times and if you're gonna essentially use bankruptcy as a tool - we don't have debtors' prisons; we have the ability to get back down our feet. So this is an opportunity for you to get through it and get to the other side.
