Bankruptcy can provide relief and a fresh start to business owners
For business owners one of the toughest things is to admit that the business is not working, that is, it is not profiting. For many despite the fact that their business has been in existence and profiting for years the recession has changed the playing field. Many business owners find themselves in $50,000.00 to $100,000.00 or more in debt and with little to no profit to operate on. To make up the difference business owners have taken short term loans to fill the gaps. The loans are often credit cards and personal loans, meaning that the business owners themselves are personally liable for the debt. The trouble starts when payments come do and the business accounts are empty. Business owners then typically borrow from personal savings, retirement, family and friends.
In many of these cases the best option is to declare personal bankruptcy and close the business. A business can always be started up after the bankruptcy without all the debt. Essentially creating a more lean and mean business rather than a debt laden business and business owner. Because business owners are perpetual optimists making the decision to let the business go is difficult when the next job or sale is just around the corner. The question I often ask business owners considering bankruptcy is, if you enjoy working for free? Essentially when a business owner is in debt all the income coming in from the business will be going to service the debt rather than for profit.
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