Running a business can be overwhelming, more so if your business involves treating the sick and helping the wounded. There may be times when you feel like there’s too much on your plate, which is why you no longer notice that the other aspects of your business are being neglected.
Take, for instance, your payments for the loan you took out to buy your business’ property. Forgetting to pay your dues once is understandable, especially when you’re so occupied with tasks, such as caring for patients, that you do it late. However, neglecting to pay consecutively can result in the foreclosure of your property.
When you fail to make the payments for your clinic’s property, your bank or creditor can take back the property because you have defaulted your right to use it. If this happens, all your hard work on the clinic might be wasted. Luckily, there is a redemption period given by your bank or creditor that you can use to correct this issue.
The redemption period is your opportunity to go about this situation in one of three ways to save your clinic: first, you can pay back your dues completely, including the interest and penalties; second, you can settle a payment arrangement with your creditor; and third, you can declare bankruptcy to give yourself some time to make a plan moving forward.
Chapter 7 or the Liquidation Bankruptcy
Usually, this type of bankruptcy is filed by people with limited income sources who have trouble paying back their dues. Be it a portion of their debt or the complete amount, the creditors or bank trustees can take most of the debtor’s non-exempt properties and sell these to pay off their outstanding debts.
For this type of bankruptcy, debtors can quickly turn their assets into liquid so that they can pay off their dues. They can also be eligible for a discharge, which is commonly given within three to five months of filing for bankruptcy.
Discharge means that the debtor is no longer required to repay their unsecured debt, such as medical bills or credit cards in which there is no collateral pledged to their creditors. This allows debtors to wipe their slate clean and get a fresh start because their debt is reduced or diminished completely.
Chapter 13 or the Reorganization Bankruptcy
When a debtor files for the Chapter 13 bankruptcy, their properties are kept in their possession. This is usually filed by qualified individuals and small business owners who are experiencing a financial crisis. The creditors will not take their properties, especially if they complete the court-mandated repayment scheme in the allotted time frame.
Filing this type of bankruptcy will allow debtors to catch up on their missed payments, which is usually spread over a span of three to five years. After completing all the payment plans made by the debtor and their attorney, there is a possibility that they can receive a discharge from their remaining unsecured debt.
With a Chapter 13 plan, debtors can halt foreclosure sales while they catch up on their payments, protect themselves from creditors, and eliminate interest payments. This is a better option than Chapter 7 if a debtor wants to retain their properties and devise a feasible scheme so that they won’t lose their assets.
How to Know What Type of Bankruptcy You Should Apply For
Both Chapter 7 and Chapter 13 have different requirements for eligibility. To ensure that what you’re filing can be beneficial to you and your healthcare clinic, you should consult a bankruptcy lawyer who has lengthy experience in the field. This way, you can keep your business afloat and still accommodate the patients in need.
You might also need to undergo credit counseling before you can file for bankruptcy because the repercussions of this process on your finances and credit score can be severe. However, this is a good solution that can solve your foreclosure problem and allow you to get back on your feet amidst the crisis.
It can be difficult to bounce back from this financial distress, even more so because you have an entire healthcare clinic and its patients hinged on your decisions. But if you successfully overcome this crisis, it can prepare you for whatever may come in the future.
Besides, filing bankruptcy will not leave a permanent scar on your credit report, especially if you can stick with your repayment schemes religiously. The mark will probably last for less than a decade, after which you can start rebuilding your credit and manage your business more efficiently.
Going through this financial matter should teach you a thing or two about balancing your passion for serving people in need while also managing a business. A responsible business owner should know better than to miss out on their dues because there is so much on the line when a crisis strikes.