Our Culture will Collapse by 2030.(64)
Bankruptcy, a silent business killer, is a surprise danger, that may hurt you.
Things are humming along, perhaps not at optimum speed, but humming never the less. You arrive at the gate to your employer’s parking area and the gate is locked. There is a notice on gate:
NOTICE TO EMPLOYEES
We regret to inform you that we have been forced to close this plant today. We have filed for Reorganization under Chapter 11 of the Bankruptcy laws, effective immediately. Our plan is to reopen this facility as soon as possible, pending court approval.
We deeply regret this action was necessary.
Management.
A surprise!
You must go to the the Department of Employment and file for unemployment as soon as possible.
Workers are often unaware of the financial condition of their employer. A firm with divisions and multiple locations, may have suffered losses in areas unknown to your section. The effects are immediate, and beyond your control.
Bankruptcy totals as of July 2023 (402) are almost as high as they were in 2020 (407). Borrowing cost increases were largely responsible for the bankruptcy. Prime Rates in July 2020 were 3.94%, up from the exceptionally low rates of the years before 2020. They were much lower than today’s July Prime rate of 8.25%. That is a ringing “ Fire Alarm”. Most medium and small size businessess must borrow at rates that are higher than the Prime rate. Your employer’s financial problems may effect other businessess. Maybe it’s a sign of a downturn in your area, or the economy in general. Look for another job, or possibly launch a new carreer.
There things you can do to protect your assets:
Dispose of things you don’t need, especially things with debt balances. Settlement negotiations are most successful when initiated by you, the debtor. This may be the time you consider selling your house and moving to a part of the country better suited to your life plans, or It may be best to protect your assets by filing Bankruptcy. Protecting your home equity in bankruptcy, or foreclosure is possible. Most states have Homestead laws that may protect a part, or all of your equity. (California is $339,000 — up to $678,000.)
Paying off your loan from your relative, or friend before you file BK, may be considered to be a preferential payment, if paid before other debts, and so, it’s unfair. Be aware that debt payments to favored lenders may be subject to “Claw backs”, in the event of your personal bankruptcy. A claw back means the court can force the recipient of your “preferential” payment, to give back, what was paid within 90 days of your BK filing. Making, or resuming payments after bankruptcy renews the debt, so be cautious about doing that.
Have a nice day.