Starting A Business After Bankruptcy: Can You Incorporate?
Among the numerous questions that individuals ask after completing their bankruptcy, one common query is, “Can I incorporate a business after discharged bankruptcy?”
If you’ve found yourself pondering this question, the straightforward answer is yes. However, it’s essential to understand the process and the considerations that come along. This article will provide a detailed guide on how to venture back into the world of business after bankruptcy.
Understanding the Basics
What is Bankruptcy?
Bankruptcy is a legal status where an individual or corporation cannot repay debts they owe to creditors. It is usually considered a last resort and happens when other debt relief options have proved unsuccessful.
What is Incorporation?
Incorporation involves the process of legally creating a corporate entity, separate from its owners. It provides the company with legal rights similar to those possessed by individuals.
The Impact of Bankruptcy
Debts and Bankruptcy
Bankruptcy affects various aspects of an individual’s financial life. One of the key impacts is on your outstanding debts. Some debts get discharged in bankruptcy while others remain.
Assets and Bankruptcy
In some instances, bankruptcy might lead to the seizure and sale of your assets to pay off your debts. However, certain assets are exempt from being seized.
Credit Score and Bankruptcy
Bankruptcy has a significant negative impact on your credit score, which can make it challenging to secure loans or credit in the future.
The Journey Post Bankruptcy
Discharge from Bankruptcy
Upon successful completion of bankruptcy, an individual is issued a discharge. This discharge effectively releases the individual from the requirement to repay certain debts.
Life Post Bankruptcy
Rebuilding your life post bankruptcy is possible. It involves managing finances responsibly, rebuilding credit scores, and setting and achieving financial goals.
The Possibility of Incorporating a Business
Yes, you can incorporate a business after being discharged from bankruptcy. However, it’s recommended to keep your statutory income tax filings and payments up-to-date to prevent future financial troubles.
Steps to Incorporate a Business
The process of incorporating a business varies by location, but it generally involves these steps:
- Initial Assessment: Understand the demands of your business and whether incorporation is the right choice.
- Deciding on a Business Name: Choose a unique and relevant name for your business.
- Filing the Necessary Documents: File the necessary paperwork with the appropriate government agency.
- Payment of Fees: Pay the required incorporation fees.
Role of Trustees in Bankruptcy
Trustees play a vital role in the process of bankruptcy. They are responsible for managing the bankruptcy process, selling assets, and distributing the proceeds to creditors.
Finding the Right Trustee
Different provinces in Canada have different trustees. It’s important to find a trustee who understands your situation and can provide the right assistance.
Conclusion
While bankruptcy can be a challenging experience, it doesn’t mean the end of your entrepreneurial dreams. Incorporating a business post bankruptcy is indeed possible and might be the fresh start you need.
Remember, while this guide provides a general overview, it’s always best to consult with a financial advisor or legal professional when considering such steps.
