“I Thought Bankruptcy Was a Coward’s Way Out, an Escape Hatch for Crooks and Cheaters”
By Kurt O'Keefe, Attorney at Law on Sep 19, 2007 in General Bankruptcy Information
This is how a small business owner described his attitude before he filed Chapter 13 Bankruptcy, in Forbes online today.
Like the vast majority of bankruptcy filers, Chapter 7, 11 or 13, he honestly wanted to pay his creditors. But it is a question of what you can do, not what you want to do.
As I sometimes put it, do you want to provide for your children, or pay VISA? The author of the piece describes his own calamties.
Many are laid off, have medical emergencies, or other acts outside their control occur that turn a business from profitable to money losing.
Because they are honest, they shy away from bankruptcy.
Bankruptcy is, and should be, a last resort.
Another way of putting it, if you do not file, what is your plan for paying the debts? You do not have the money to pay now, how are your expenses going to decrease, or income increase, so that you have more money in the future?
You cannot borrow your way out of debt. Many people go to friends and relatives for money to pay credit cards and other bills, fully intending to repay the friend or relative.
Again, ask yourself, what is going to be different about my finances tomorrow that will enable me to pay what I cannot pay today? You do not want to be forced to face the facts after running up loan balances with your relatives. They trust you, and do not run your credit report or otherwise analyze how they might be re-paid.
My experience is, that all business owners view their world through rose colored glasses. It used to be profitable, so things will turn around. Predicting the past.
No one goes into business planning on losing money.
Start with a real budget of your actual income and expenses. Review your check register, cash purchases, automatically deducted payments from a bank account, and, yes, charge card bills.
Chapter 13 provides for a repayment plan, not necessarily 100% of the debts.
Do not stay in denial. If you are taking more cash advances, cashing in 401(k) or other retirement accounts, borrowing from relatives to get through each month, that is a problem.
Gather together the real facts of your situation, and consult an experienced attorney.
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