Tom Eldridge writes in the Global Economic Intersection that there are 5 top mistakes business owners make when considering bankruptcy. Since I handle both small business bankruptcy and personal bankruptcy in Indiana and of course have seen lots of mistakes being made, I was interested to read what Eldridge considered the five biggest.
Indiana, of course, is home to many, many small businesses, well over half a million of them, as a matter of fact. Since the economic downturn that began in 2008, there has naturally been an increase in the number of small business bankruptcies filed in our state. Very often, individual bankruptcy and small business bankruptcy are tied together, especially in cases where loans or lines of credit for the business were guaranteed by personal assets (something that happens a lot, my colleagues in all five Zuckerberg bankruptcy law offices agree).
As a longtime debt consolidation lawyer offering Indiana bankruptcy assistance, the interesting thing I‘ve found is that those business owner mistakes Eldridge named are really the same mistakes individuals make in the months leading up to filing Indiana bankruptcy. Two main ones are:
Trying to get out of debt by selling assets.
“Each state has statutes that determine which assets can be kept when one is filing bankruptcy. These are known as exemptions and should be carefully considered. Many will start to liquidate assets they should actually be keeping.” Since I helped write the portion of Indiana bankruptcy law that covers exemptions, I definitely agree that many individual debtors, along with business owners in debt, fail to take advantage of those exemptions. Individuals, for example, might spend down retirement plan money when those funds are exempt.
Taking on more debt right before a bankruptcy:
“Taking trips, taking cash advances, or maxing out credit lines before an anticipated bankruptcy can actually be seen as a form of fraud….”be honest, keep additional debt to a minimum and ensure that any money spent is absolutely necessary,” cautions Eldridge.
Lawmakers were obviously concerned that debtors might abuse the system, which would not be fair to creditors. Each situation is different, however, and if buying a car to get to work or paying for medical treatment is the form of new debt, that’s not abuse. The point of bankruptcy in Indiana or anywhere else is to treat all parties as fairly as possible while still providing a safety net. That’s one of the reasons I always advise not waiting, but talking with an attorney at the first signs of financial trouble. It’s why I offer no-cost and no-obligation consultations.
Whether you’re involved in small business bankruptcy or personal bankruptcy in Indiana, it can be difficult to make informed decisions without knowing the ins and outs of Indiana bankruptcy law!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg