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A bankruptcy covers the debts you owe as of the moment you file your case, not future debts. So how do you know when to file your case?

In last week’s blog post we introduced how to time your bankruptcy filing. We gave a list of 15 examples of timing considerations. Today we start with the first example: timing your bankruptcy filing so that it covers as many debts as possible.

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Businesses considering bankruptcy get intense legal advice before filing. You would also be smart to get solid advice to make a good decision.


What Businesses Do Before Filing Bankruptcy

The following are just a few of the companies which have filed business bankruptcy in the last couple months:

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If you prefer NOT to pay back wages to a present or prior employee, bankruptcy can help you use the law to prevent it being a priority debt.


Imagine that in the near future you’re closing down a business and filing bankruptcy. You owe an employee or independent contractor back wages or commissions. But you’d rather not pay that debt because you believe that employee had a major role in the business failing. You’d much rather have your scarce money go towards, for example, paying your income taxes. How do you use the law to your advantage to accomplish this?

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If you prefer to pay back wages to a present or prior employee, you can do so in Chapter 13 especially well if that debt is a priority one.

Our last three blog posts have been about debts you owe to your employees or independent contractors. Specifically, we discussed the conditions under which past wages, commissions, or benefits qualify as a“priority” debt. These posts covered:

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If you owe sales commissions to an independent contractor when you file bankruptcy, it may be a priority debt. Here’s what determines this.

Our last blog post was about conditions in which wages, commissions, or benefits owed to an employee are “priority” debt.

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