There are many reasons why a debtor may choose to file bankruptcy and consult a bankruptcy lawyer. Some of those reasons have to do with a failed business, medical bills, or unemployment. For most small business owners who have started a business and have not been successful, they should think about filing for personal consumer bankruptcy, rather than a business bankruptcy. This is because for most business owners, they have signed personal guarantees on their debts, making them personally liable for these debts. These means that creditors could potentially garnish personal wages and bank accounts. Additionally most business owners who ran failed businesses do not have many business assets, which means should a judgment be entered against the failed business that has been dissolved will not have any affect on the debtor filing for personal bankruptcy.
If on the other hand you need to consult a bankruptcy expert in order to determine whether filing bankruptcy will affect your ability to start a business in the future, then you can rest easy for the most part. After a debtor files for bankruptcy, the bankruptcy will be reported on your credit history for 10 years. This does not mean that you can’t start rebuilding your credit immediately. For some debtors filing for bankruptcy may actually increase your credit score. This is because prior to the bankruptcy you may have been unable to pay your bills and now you can pay them. In term of actually filling out the paperwork with the secretary of state to start a new business, filing for bankruptcy will not have an affect on your ability to be a business owner. Where it may have an affect on you is if you are trying to obtain a line of credit in order to start a business. However, I can’t imagine somebody filing for personal bankruptcy would have been eligible to obtain credit prior to their bankruptcy filing, unless they were not delinquent on their debts to begin with.
Therefore if you are looking for a fresh start to your financial future, you should consider filing a personal chapter 7 bankruptcy if you qualify as this most likely will not have an affect on your ability to start a business in the future.
If you have additional questions regarding starting a business after filing for bankruptcy, schedule your free bankruptcy consultation today by calling 206-682-7975