Truckers face uncertain times in 2023 because of looming recession and inflation
Story by: Michael D. Elkin, Esq., MBA
While pay for trucking services has declined on the spot market, expenses have increased — especially for fuel, which reached $5.41 per gallon across the U.S. last November. This is an increase of nearly 50% from the previous year, according to Freightwaves.
The American Transportation Research Institute (ATRI) describes the current times as “the most chaotic and unpredictable time period in many decades.”
The top reasons for Trucker Industry’s biggest challenges are:
- FALLING SPOT FREIGHT RATES
- HIGH PRICE OF DIESEL
- HIGH-INTEREST RATES ON LOANS
We are all witnessing the trucking industry face great difficulties, with many indicators pointing to a freight recession. This means that many trucking companies may struggle with debt and find ways to stay afloat. The good news is that debt options are available. Help is available to guide you through this process and help you determine the best path forward for your trucking business.
It’s a very sad sight to see truckers feeling demoralized and drowning in debt. Truckers who had the courage and grit to start their own businesses should hold their heads high and know that they are not alone, and that help is within reach.
A lot of truckers have great small trucking companies or they are owner-operators, and all they need is to put a pause on some financial obligations, examine company finances, and create a reorganization plan. In these types of instances, lawyers will advise their clients to file for Chapter 11 Bankruptcy Protection.
How Lawyers Can Help
The first thing lawyers should do when they meet clients is to look at the finances of the business — together. The lawyer and the client need to examine whether it makes sense to keep the doors open and operating. In a lot of instances, lawyers can help those doors stay open.
A lot of truckers have great companies and all they need is to put a pause on some financial obligations, examine company finances, and create a reorganization plan. In these instances, lawyers will advise their clients to file for Chapter 11 Bankruptcy Protection.
What is Chapter 11 Protection?
A Chapter 11 Bankruptcy, also known as a reorganization bankruptcy, allows you to reduce and reorganize your debt, enabling you to keep your doors open and your trucks on the road!
A Chapter 11 Bankruptcy will put a stop to all collection efforts and repossessions — giving you breathing room to continue working! Often, lawyers can even get trucks returned to their clients that were already repossessed. During this period, the lawyers will work with the trustee assigned by the court to create a reasonable and affordable repayment plan that will last three to five years.
A Chapter 11 bankruptcy will give lawyers the opportunity to negotiate a client’s debt with their creditors. Because clients are in bankruptcy court, lawyers have great leverage to negotiate very favorable terms. It’s very likely that the court will agree to lower the amounts clients owe to their creditors, even if creditors object that the payback amounts are too low. Good lawyers often use these proceedings to lower monthly finance payments and cut interest rates going forward.
What is Chapter 7 Protection?
If keeping your business open is not an option, lawyers assist their clients by filing for Chapter 7 Bankruptcy. Chapter 7 Bankruptcy, also known as liquidation bankruptcy, can help owners liquidate their businesses and minimize their personal financial liability. Most truckers had to sign personal guarantees to purchase their equipment. With a Chapter 7 Bankruptcy, owners get to walk away with a completely fresh start.
Michael D. Elkin, Esq., MBA, a Bankruptcy Attorney at The Freydin Law Firm, PC, contributed to this story.
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Source and credits: iTrucker / iTrucker.com / freightwaves.com / ATRI / truckingresearch.org