Current economic conditions are making it difficult for many business owners in Oklahoma to avoid mounting debt. Some businesses are already unable to pay their bills while others are struggling to do so because of their customers’ inability to make good on the debt they owe. Business owners concerned with the debt facing their businesses may do well to familiarize themselves with the rules and regulations regarding bankruptcy.
The Fair Debt Collections Act
The FDCA provides guidelines for allowable actions by collectors in pursuit of debt. This legislation does not cover business-to-business debt, nor does it cover debt that a business owner needs to collect from debtors. The FDCA allows collectors to pursue the money owed to them without becoming guilty of harassment.
Some people mistakenly believe that a bankruptcy filing will mean they are no longer responsible for any of the debt they owe. The truth is that bankruptcy guidelines provide a structured plan for the repayment of some or all of the debt owed.
Chapter 7 bankruptcy typically requires business owners to close the doors on their business. Owners then settle the debt they owe in a specific order. Chapter 11 bankruptcy allows a company to restructure its debt and craft a structured repayment plan for the benefit of creditors.
The structure of a company will play a role in the repayment of debt. Sole proprietors and some partnerships face the risk of a court going after the personal assets of owners to satisfy debt obligations. However, corporate structures shield the personal assets of business owners from business debt liability.
A lien provides debt collectors with the right to claim money owed to them directly from the bank account maintained by the business. Collectors will also be able to garnish payments received by the business entity from its customers.
Business owners who must deal with the debt collectors can find the process nearly as time and labor-intensive as running the business itself. Owners concerned with the debt facing their business may benefit from speaking with an attorney.