My Business Failed and I’m a Disabled Veteran


Dear Steve,

We bought an existing business – a gym- with an SBA loan. Even though we grew the membership from 80 to 430 within 2 years, the overhead and servicing the loans were crushing us. Enter the $10 per month gym chains and we had no other option than to sell the gym for a fraction of what we owed. I’m the only one on the loan, and I have a $80000 deficiency to the bank, plus credit card debt. We used the cards for necessities when the gym could not support us. I have an attorney.

I also have student loans of $160,000 and only make $15 per hour at an insurance agency, which is more than I took home owning the gym. I earn a little extra money doing personal training. My husband is a hairdresser with 2 jobs. I get VA disability which covers our mortgage and insurance (health, life, auto). We have a budget we stick to, and that’s how we realized that we are spinning our wheels trying to get out of debt just making minimum payments.

We are trying to avoid a chapter 7, but it appears that we may not be able to. We can’t file until 2017 because we filed in 2009. I was honorably discharged (medical board) from the Army and as the market crashed we couldn’t pay our bills due to my income being less than half.
If we were to stop paying our creditors, how soon until we get sued for default and our wages get garnished? Can we string this out until March 2017?



Dear Christine,

Your situation is exactly why bankruptcy is a legal option. It is designed to give people willing to take a risk, a fresh start and become productive members of the economy again.

Remember Donald Trump bragging about how many times his companies filed for bankruptcy and saying it was a smart thing to do?

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.
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You might want to think about filing a chapter 13 bankruptcy to get you through the date to file a chapter 7 bankruptcy again. The chapter 13 would give you the protection you need right now to try and get your life back in some financial balance. When you hit the date to file a chapter 7 you could dismiss your chapter 13 and file the chapter 7.

Continuing to try and promise to make payments you can’t afford now is not a strategy.

And sure, you could just stop paying, that is an option. But you will start being deluged with collection activity, threats, maybe some lawsuits, and an odd wage garnishment. Talking to your local bankruptcy attorney would save everyone some time and anguish. It would protect you emotionally from the depressive collection tsunami, it would not waste the time of the collectors who you already understand you can’t pay, and it would protect you from legal action by the creditors.

When you talk to your local bankruptcy attorney, you should also have a chat about your student loans. If you owe private student loans then they may be dischargeable in your bankruptcy. See These Private Student Loans Can Be Easily Discharged in Bankruptcy.

If you owe federal student loans you can either look to get on one of the income based repayment programs or your attorney could make the argument the loans are an undue hardship and attempt to get them dismissed or reduced. He would have to file an additional proceeding to make that happen.

But as you can see, all of this strategy involves a good local bankruptcy attorney who can help you to brainstorm and come up with a game plan.

Damon Day - Pro Debt Coach

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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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