My Business is Melting. What Options Do I Have Other Than Chapter 11 Bankruptcy? – Robert

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June 23, 2009

Robert 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,

I own a dental lab business for about 28 years. It does well enough to pay my bills and credit card debt so far. About 3 years ago i bought into an ice cream store and created an all organic ice cream. It was a great idea, i thought, but never really took off the way i thought it would.

To make a long story short, I wound up giving it up. As a matter of fact, i am selling it to an auctioneering company that i know i will get very little money for, but i can’t afford to hang on to the store because i don’t want to pay another months rent and i just want to get out of this.

I owe tons of money to bank loans, credit card. and vendors and utilities. I don’t know what i am going to do. I feel like i will never be able to pay off these bills. My accountant told me that chapter 11 is only temporary and it cost about 25 thousand just to file. So thats out of the question. I own a house and i own my office space for my business. I am worried that i can lose them.

Do you have any suggestions of what i can do to get out of this tremendous debt that i have?

Robert”

Steve’s Answer:

Dear Robert,

Why doesn’t the business just go chapter 7 bankruptcy and close the whole thing down? I am assuming you are not personally responsible for any of this business debt.

Chapter 7 business bankruptcy is best when:

the business has no future,
it has no substantial assets or qualities that cannot be reproduced after bankruptcy, or
the debts are so overwhelming that restructuring them is not feasible.

I can’t imagine that the sale of the business is going to happen with all the debt around the neck of the business.

Talk to a local bankruptcy attorney and get advice before you sell the ice cream company to the auctioning company.

Big hug.

@GetOutOfDebtGuy