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Bankruptcy May Be Your Option

Low oil prices could lead to business bankruptcy

A variety of consumers in Oklahoma and across the country are rejoicing over the falling prices of gasoline. Some reports indicate that the price of a barrel of oil is at a 12-year low. While the average consumer might be rejoicing, the decrease in cost could lead some oil companies into overwhelming debt, potentially resulting in business bankruptcy.

Oil prices continue to drop. Despite the drop, many drillers are choosing not to slow down operations, pushing more oil into the market. Three investment banks anticipate that the price of oil will continue to fall due to the continued drilling and other market conditions.

If the price of oil does not rise, many oil companies could be facing a significant debt. Some professionals estimate that these companies may overcome these challenges if the price of oil raises to $50 a barrel. However, some reports indicate that approximately 30 businesses, owning a combined $13 billion in debt, have already sought bankruptcy protection. Current projections indicate that over 30 percent of oil-and-gas producers in this country could follow the same path by Summer 2017.

As many business owners in Oklahoma are aware, there are many elements related to the overall success of a business that are completely out of an owner's hands. Because of certain market conditions, some businesses find themselves sinking in debt. In order to better organize their debt and improve their future prospects, many seek business bankruptcy. Many companies have used this option to get out from under the burden of debt. In some instances, a business can restructure its debt, allowing it to fulfill obligations to creditors while reducing some of the stress created by such a heavy financial burden.

Source: marketwatch.com, "Plunging prices could force a third of U.S. oil firms into bankruptcy", Bradley Olson and Erin Ailworth, Jan. 11, 2016

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