Merchants Can Choose Bankruptcy To Keep Their Business Afloat

Apr 15, 2016

Bankruptcy can be the best option to choose for keeping troubled businesses afloat or closing them efficiently. To benefit, you should consider the specifics of your business and the bankruptcy type you’re going to file.

Certain Chapters of Bankruptcy

Due to Chapter 13 bankruptcy and Chapter 11 bankruptcy, you can keep your small business open and make smaller payments to creditors each month. If your business lacks the necessary cash flow to make payments, you can close your business efficiently based on Chapter 7.

Not all businesses can choose one and the same bankruptcy option. The reason is that filing bankruptcy has different effects on different types of businesses. Taking wrong steps can have a negative impact on your personal finances and even take you to court.

Even if you have poor credit, this is not a problem for reputable payment processors like emerchantbroker.com. EMB can get you a reliable and secure bad credit merchant account with ease.

Bankruptcy Options for Sole Proprietorship

Let’s focus on merchants who are sole proprietors. This means they own a business, which is not a separate entity and they are responsible for the business debts. In this case, the bankruptcy filed must include both the sole trader’s personal and business debts and assets.

Below you can find bankruptcy options for sole proprietors:

  • Chapter 7 Bankruptcy Your business and personal debts will be released from charge without making you pay over time. Not all types of debts will be eliminated. Both your business and personal assets will become part of the bankruptcy estate. However, you’ll be able to keep certain assets that are known as “exempt assets.” If you have little property, you can keep most or all of it.
  • Chapter 13 or 11 Bankruptcy – This will allow your business to go on operating, but enough cash coming in on a monthly basis is required for making your monthly payments. Be aware these payments will be smaller. Choose this option if:
  • You don’t qualify for Chapter 7 but need to get protection from the creditors
  • You need to keep your business open
  • You need more property than Chapter 7 allows

Bankruptcy Options for Corporations and Partnerships

These businesses don’t suggest business debts discharge. No exemptions will be available to protect your business property. Below you can find more details concerning these bankruptcy options.

Chapter 7 Bankruptcy – The bankruptcy trustee bears the responsibility of paying off your business assets and distributing the proceeds to your creditors. This can help you save the business money without facing a lawsuit. However, you won’t get rid of your personal liability of paying your business bills. If the corporation files bankruptcy in federal court, the creditors will easily initiate alter ego litigation to make the shareholders pay the corporation’s debt.

Chapter 11 Bankruptcy – The corporation will be allowed to operate, making smaller monthly debt payments.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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