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Another clothing store is looking to bankruptcy for assistance

There are various types of bankruptcy filings that can be utilized by individuals or by companies. Depending on what the end game is with respect to filing for bankruptcy will dictate which filing is most appropriate. Some bankruptcies are for debt reorganization purposes in order to give time for financial matters to reconcile themselves. While other types of filings wipe the debt completely away. Filing is intended to give the filer a fresh financial start in that most of the debts will be wiped clean. Even with that being said, some debts stay in place and are still the responsibility of the debtor.

A company that files for chapter 11 is doing so because it wants to reorganize its business. Cache, a popular woman's retailer that focused on boutiques style clothes, filed for chapter 11 bankruptcy and the court protections that go along with that for. Because of Cache's substantial liabilities, the company thought it best to take this route in order to secure future financial stability. Wit the bankruptcy filing, Cache will have to close some of its stores.

It is important to note that bankruptcy is not necessarily always the right answer. Although at the outset it will diminish the amount of debt and give a sense of financial freedom, there are some downsides for bankruptcy. For one, the filing remains on record for a number of years. With respect to individuals, a bankruptcy can stay on file for up to seven years. Moreover, it can impact and have an adverse effect on one's credit rating. Companies that file for bankruptcy also will have a mark on their record for a period of time as well.

It is important to think through a bankruptcy and all that it entails prior to filing it.

Source: The Wall Street Journal, "Women's Retailer Cache Seeks Bankruptcy-Court Protection," Sara Randazzo, Feb. 4, 2015

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