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New Jersey & New York Construction Law Blog

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The basics of bankruptcy among contractors

On Behalf of | Dec 9, 2021 | bankruptcy |

In the construction industry in New Jersey, companies and contractors are at risk of bankruptcy just as anyone else. If you’ve been asking yourself questions about bankruptcy in the context of construction, you’ll want to be informed before deciding to file.

Why do contractors file for bankruptcy?

There are a number of reasons why construction contractors might file for bankruptcy. Contract disputes, missed payments from clients and the high cost of materials can all lead to financial trouble. Bankruptcy can provide some relief by discharging debts or reorganizing them in a way that makes them more manageable.

What should contractors do before filing for bankruptcy?

If you’re in construction and bankruptcy seems like the best option for your business, there are a few things you should do first. First, try to negotiate with your creditors and see if there’s any way to work out a payment plan. Second, make sure you have a good understanding of the bankruptcy process and what it will mean for you. You should also consider researching the consequences of filing for bankruptcy for your business before you file.

What are the consequences of contractor bankruptcies?

When a construction company files for bankruptcy, it does not mean that it will go out of business immediately. In fact, many construction companies use this opportunity to reorganize and get things back on track while continuing their work. However, construction companies that file for bankruptcy might lose clients, lay off employees and sell assets.

How can contractors avoid bankruptcy?

One way to avoid bankruptcy is to make sure you have a good financial management plan in place. This includes keeping track of your expenses and income, budgeting properly and planning for any construction projects that you may have coming up. Another way to avoid bankruptcy is by maintaining good relationships with clients and suppliers so that you can avoid construction disputes and missed payments.

Bankruptcy can be a scary prospect for construction companies, but it doesn’t have to be if you know what you’re getting into. While there are no guarantees, construction businesses may be able to avoid bankruptcy if they take steps ahead of time.