Is filing a Chapter 7 or Chapter 13 filing ideal? Of course not. It has its consequences, and the filer will have to deal with them for many years to come. For example, since a bankruptcy filing will immediately impact your credit score, it can be difficult to secure a loan in the aftermath of bankruptcy.
However, the alternative is even worse. An individual could fall so deep into debt that they face criminal charges for, say, evasion. Or the debt can become so overwhelming that an individual is basically forced to file for bankruptcy — and at that point, it can be “too late,” so to speak. What we mean by that is, you may lose more if you file a “late” bankruptcy filing as opposed to being proactive, accepting the negative side-effects of a bankruptcy and just going through with the filing at an early stage to get your financial situation under control.
One of the most famous visual effects companies in the entertainment industry has fallen on hard times. After laying off 200 employees, Rhythm & Hues — which did work for the film “Life of Pi,” which is up for an Oscar for best visual effects — has taken another step towards securing its financial livelihood by filing for bankruptcy protection. Rhythm & Hues is not the only visual effects company to struggle. In fact, numerous such companies have either disappeared or sought bankruptcy protection.
Continuing the Chapter 11 theme from our last post, the American Bankruptcy Institute recently released a report that says Chapter 11 bankruptcies filed by businesses plummeted over the last year. In Jan. 2012, there were 749 such Chapter 11 bankruptcies — whereas this January, there were only 479. That represents a remarkable 36 percent drop.
Individuals in Los Angeles are not the only victims of outstanding debt. Many businesses in the area, and all around the country, struggle to stay afloat after taking out loans — and the smaller that business is, the more difficult it can be to get out of the red. Even with the seemingly impossible task of paying the debt back looming over a business, the owners of the company should not panic. There are ways to manage your debt in a way that allows the company to survive, move on and even thrive.