Small Business Bankruptcy: Many Are Like “Joe the Plumber”

06 Dec Small Business Bankruptcy: Many Are Like “Joe the Plumber”

The election is over, and Joe the Plumber isn’t on the forefront anymore. He became the symbol of people everywhere who wanted to own their own business and become rich doing it. The ultimate “American Dream“.

Because of my 20+ years experience as a bankruptcy lawyer in Charlotte NC, I think that I may have listened to Joe the Plumber’s story in a very different manner than many others do. I cringed listening to him say he worried about how to pay taxes on a business he doesn’t even own and has no money saved up to buy or operate.

I have seen many people over the years file for bankruptcy because they opened a business without realizing what they getting into, or having the financial means to do so successfully.

The problem with many “Joe the Plumbers” is not that they dream big, but they don’t have the tools or knowledge to make those dreams come true. As a small business owner, I understand the benefits and the struggles that small business owners experience. As a bankruptcy attorney representing small business owners, I see many failed businesses because the owners simply did not understand the basic business principals of running a business.

Under capitalization is one of the leading problems leading to the failure of many of the ‘young’ businesses I see. In simple terms, that means that the business doesn’t have enough money to cover it’s ongoing obligations. Many owners come in to see me to discuss bankruptcy just as the business starts to make good money.


Just as they started to make money?


During start up when there was no money coming in, they used borrowed money to pay the bills. A few years into it and just when the money starts coming in, they find there isn’t enough to pay the debt AND the regular, ongoing operating expenses like rent, taxes, payroll.

I see these owners come in crushed under the debts that they incurred to run the business. The profits just aren’t enough to pay for everything. Even if the business is doing well, the owner might have used loans or credit cards to pay their personal expenses during the first few years and they aren’t making enough to meet their personal needs and pay off those debts.

Many have to file personal bankruptcy. The lucky ones are able to file bankruptcy without losing everything that they have worked for. Sometimes we are able to save the business and eliminate, restructure or lower the debts.

A good bankruptcy attorney can advise you about what is at risk, and what your best option is to protect yourself and your business.

The real Joe is actually Samuel Joseph “Joe the Plumber” Wurzelbacher, a man in Toledo Ohio who worries about higher taxes he may have to pay in the future on the profits from a business that he doesn’t own, but hopes to buy.

He is not a business owner, but wants to be.

He isn’t making near the $250,000 per year mark that he is worried will cause his taxes to be higher.

He isn’t even a licensed plumber.

Now don’t get me wrong – Joe seems like an average, good guy with a terrific goal to improve his life and build something for himself and his family.

But as an average guy, even if he is a great plumber, what does he know about running a business?

Being a great plumber doesn’tguaranteethat you can be a great business owner.

In reality, while it certainly helps to be good at what the business does, a business probably has more chance ofsucceedingif the owner knows nothing about plumbing but has a business degree and a lot of savings to pay for the business and his own living expenses until the business is established.

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Concentrating in Consumer Bankruptcy Law since 1988; Wake Forest Law School JD 1987 Law Office of Susanne M. Robicsek since 1993, Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.

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