Anna wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.
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“Dear Steve,
My husband and I own a construction company (S-Corp) that is basically dead in the water in the current economic slowdown. We are surviving on 1/4 of our previous income and cannot repay our credit card and vendor bills for our business. We have several jobs we’ve had to lien due to nonpayment by our clients, but they have no money, either. We don’t know if we should file bankruptcy on our company or not. Many people we know say not to, just go with the flow and wait for times to improve. What do you think?
Should we go bankrupt with our business? Can we then start another one fresh?
Anna”
The Answer:
Dear Anna,
I think that before you can make a determination if bankruptcy is right for your business that you need to meet with a bankruptcy lawyer. If it is right for you, from a business point of view, it will depend on the facts.
There is no doubt that bankruptcy can be a valid business tool, as evidenced by all the airlines that have gone bankrupt time and time again.
It is unfortunate that you have found yourself in this situation but as you can see you are simply a small cog in the great chain of trickle down economics here.
I think your decision if bankruptcy is a smart move for the business should not be made on an emotional level but only after a careful review of the facts by a licensed bankruptcy attorney that specializes in small business bankruptcy.
The approach of “going with the flow” is worth thinking about but as long as you do that you will remain at risk of being sued for your part in this financial mess.
