6 Bankruptcy Myths That Can Cost You Everything:
Think bankruptcy will ease your debt burden? Think again.
1. “Bankruptcy offers me a clean slate.”
No. Here’s the truth: in Chapter 11 bankruptcy you still repay 100% of your debt over a period of five years, almost without exception. This means you get no actual debt reduction and your business credit gets destroyed nonetheless. Furthermore, things will get a lot worse if the plan falls apart – which it probably will (keep reading). EvenChapter 7 can leave a lien on your home and a flood of unresolved legal and financial issues.
Bankruptcy isn’t a safety net, it’s a money pit.
2. “Bankruptcy will keep things from getting worse.”
If you are even considering bankruptcy, you are probably all too familiar with how costly lawyers and legal proceedings are. On top of paying back 100% of your debt, you’ll need to add the exorbitant legal costs to prepare the plan. From there, objections to the plan will inevitably arise, and every single objection or issue becomes its own legal proceeding that must be resolved before your main bankruptcy case can proceed. Add the cost of a lawsuit to each and every issue or objection that arises, and your legal fees grow exponentially.
You think you’ll regain control.
3. “At least I’ll get my life back.”
Your life will quickly spiral into chaos as you lose control to Trustees, the Judge, and opposing creditors. Any and all of them can create innumerable delays to your plan with seemingly endless objections and other obstacles. With so much time and money at stake, you’ll have absolutely no leverage or control over the process and will be at the mercy of the system, as your funds are bled dry trying to hold the plan together.
Chapter 11 won’t protect your personal assets.
4. “At least my home and personal assets are protected. I’ll be okay when it’s all over.”
This is the most dangerous myth of all. Here’s why. Most people thinking about Chapter 11 bankruptcy believe there’s a firewall between the business and their personal assets. What you aren’t told is how HIGH the risk of conversion to Chapter 7 is. So now, after being drained financially and emotionally, your business is shut down and ALL of your assets are liquidated. You risk the loss of everything for which you have a personal guaranty, which, these days, is almost universal.
Bankruptcy fails MOST of the time, leaving you worse off than before.
5. “Those are worst case scenarios, right?”
They aren’t. Chapter 11 bankruptcy will fail an astounding 75 percent of the time! That means there’s only a 25 percent chance you make it through your plan successfully. So, after the huge financial and emotional toll, it’s not only possible you’ll lose everything, it is probable you will lose the business you built; leaving you worse off than had you done nothing!
Bankruptcy is NOT your only option. It is just your worst option.
6. “I can’t pay my debt. I have no choice.”
At Second Wind Consultants, we say “NO” to bankruptcy. As business consultants, we can tell you what lawyers and lenders won’t: bankruptcy is seldom in your best interest. There’s no reason to risk destroying the business you created, or the jobs that depend on its success. Our stand is that it’s both unethical and unnecessary.
There’s a better way. Over 35 years ago, our founder pioneered business strategies that will eliminate the majority of your debt without bankruptcy, without the loss of the business, and without all of the financial and emotional devastation that bankruptcy entails.
Learn more about how we can eliminate your debt and put you back on the path to success – right now.