Entrepreneurship is undoubtedly full of risk, and deciding to own and operate your own small business is no easy task. In fact, about 7 out of 10 business fail within 10 years – so don’t feel too bad if this has happened to you, because you’re definitely not alone.
The most common reason small businesses fail is because they run out of money. Money management is a challenge for most people, and it can be difficult for many business owners to anticipate just how much money they actually need once their company is up and running.
Consequently, many end up taking out loans that just add to their problems. Once the company eventually closes its doors due to lack of capital, the owner may be left with a huge amount of debt. If you’re in this situation, one option you may be considering is bankruptcy. Here’s what you need to know.
Get Debt Help
Managing a small business bankruptcy on your own can be overwhelming, stressful, and also confusing. That’s why you should consider seeking out the aid of a bankruptcy trustee in Vancouver Island with the experience to successfully navigate you through this difficult period. They’ll be able to offer you advice and also answer any question that you may have.
As a small business owner in Vancouver Island you may find it advantageous to work with a small firm that specializes in local bankruptcy services for small businesses. They’ll be able to offer you personalized services with a dedicated staff that is committed to helping people through financial stress and difficulties.
How Bankruptcy Works in B.C.
Bankruptcy in British Columbia is a legal process where you obtain debt relief by assigning your assets to a licensed insolvency trustee. In order to file for bankruptcy in B.C., you must do business in Canada and qualify as an insolvent, which means you:
- Owe at least $1000;
- Are unable to pay your debts; and/or
- Have stopped payment on all debts; and/or
- Have more debt than your realizable valuable of assets.
Once you file for bankruptcy there is a legal “stay of proceedings” that applies to any unsecured debts that you have. This stops any ongoing legal collection actions and also prevents any from starting. Calls from creditors and collection agencies should cease, and there will be a stop to wage garnishments including those from the Canada Revenue Agency for income tax debts.
The stay of proceedings will last until your discharge from bankruptcy when all your debts are legally extinguished. Typically, discharge occurs automatically after a period of 9 to 36 months depending on whether or not you have surplus income or have been bankrupt before.
Learn to Manage Your Finances
Bankruptcy is an opportunity for a fresh start, which is why it’s important that you learn how to properly manage your money afterwards. Should you decide to start up your own business again, it’s going to be vital that you don’t make the same mistakes that you made last time.