Ask The Get Out of Debt Experts Business Debts

We Own a Small Business That Has Never Made Much Money. How Do We Get Out of This Mess? – Sierra

“Dear Steve,

We own a small business for 11 years that has never made much money. my husband filed bankruptcy and put everything for the business in my name and all or our personal property, credit cards everything in my name. now we are in trouble with the irs because my husband did not file all of our tax forms and did not pay the payroll taxes (public trust taxes for our employees) and when we finally got an agreement for payments with the irs he still missed payments.

i do not work for the company, i have always worked another job to bring in a steady check with benefits for both of us and our son. the missed payments have brought the irs back to our door with a vengance and they want us to fill out these forms telling them everything ! we make, we have etc ! my husband continues in the business, gets angry if i discuss it with him and rants and raves about the irs and taxes when he knows it is his fault that he didn’t pay them for so many years.

the tax attorney that we have says that we will have to give everything, raises, bonuses, 401ks, everything to the irs and live by the “national standard graph” on the irs website. as far as i can see if we live by that graph we will be put into poverty. i am angry and hurt, i do not want to lose my raises and bonuses from work and not be able to contribute to my 401k but the attorney says that by missing the payments that we have brought the irs back down on us.

Damon Day - Pro Debt Coach

my husband refuses to discuss closing the business although the attorney says that the irs will not continue to let the business bleed and not get their money. it takes ten years to get the tax debt discharged and we have only fulfilled 3 of them. i do not want to spend my years (i am 50) living with the irs taking everything away from me and i do not want to live with that business draining everything away as it always has.

i am very angry ! he told me the other day that if i want to leave to go because everything in his life has been hard and it wil l never be good so i need to go find someone who can give me that life. well guess what..i don’t believe in divorce, especially since we are a black couple with one child and that is rare today and we are beating the statistics.

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however if i did leave since everything is in my name i will still be held responsible. i blame myself for never checking on things and just signing and approving anything that he put in my face. i was not proactive but now i just sit around hiding and crying and feeling like what is the point in getting raises and bonuses at work because all of it will go to the irs. i try to not let my son see me cry, we hide these problems from him, he is 15.

if my husband sees me crying he gets angry and tells me to deal with it and then he ties everything that he has done to religion and that he has a cross to bear and God will bring us out of it. i trust God but i do not trust my husband to deal with reality and do the right thing. if it were not for my son i am afraid i would kill myself over this.

i don’t see a future with much hope because without at least the little money we made how can we take vacations or help our son when he goes to college ? and when he applies for financial aid they will look at our situation and he could affect his receiving grants.
also, my husband has a student loan over 30,000. that he has not paid and defaulted on several times.

we have state and local taxes that we are in trouble with and lots of credit cards. i dont know what to do or even where to begin. please help me. also, we have spoken with an attorney recently and the amount is over $ 200,000.00 and even when we shut the store the irs will continue to add interest and penalities to the amount owed. The amount of $ 200,000.00 was the actual $ 75,000.00 we owed in the beginning with interest and penalities added on.

how do i get us out of this mess ? where do i begin ? how do i cope ? how do i make my husband deal with reality about owning a failing business ? how do i keep my family together ?
because it is payroll taxes that we didn’t pay from what I understand they will keep adding taxes and penalities.

We will never be able to catch up. what do we do ? should we sell our house if we cannot take care of its upkeep ? my husband said that no we shouldn’t sell it we can keep it up but we that isn’t true if we have no money and the irs puts us at poverty level. We will be at poverty level if they make us live by their “national standard” chart on the irs website. Help please !!

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Dear Sierra,

You need to stop being the victim here and step up and take charge of what you can. You also need some clarity on what your priorities are. Do you have a greater responsibility to work towards a better life moving forward for you and your son or to continue this downward spiral at the side of your husband?

I think it looks like the situation has exploded beyond your ability to financially rescue it. Once you made the IRS mad a lot of negative things can happen. Looking into my crystal ball I don’t see any expectation you’ll be able to dig yourself out of this hole you are in. I think you should click here to find a local bankruptcy attorney and go talk to them.

Based on what you told me here I’m going to make some assumptions. Your husband’s business was not a real business. it was a distraction, a fun thing, a hobby, at best, to keep him entertained and busy. His inability to properly deal with the failure of his business a long time ago and allow it to drag you and your son under is just downright irresponsible in my view. Rather than rant and rave he needs to Man Up and deal with it.

He knew the business was not profitable. He knew he owed the IRS. He knew he had to make payments to the IRS. He knew all of this.

And while he put all the credit cards and debt in your name, I would bet he still used the cards and ran up the debt.

You need to listen to your tax attorney and complete all the documentation as he/she advises. You don’t want to mess with the IRS at this point.

Believe me, I am a compassionate soul but I have no patience when the inability to make a tough choice leaves someone in a harmful situation. Truth; unless you take some action to protect you and your son, your financial future looks dark and your husband drags you under in his continued financial folly.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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