For many, the prospect of filing a bankruptcy is filled with trepidation. They worry that it is a sign of irresponsibility or they will be embarrassed to admit to their friends they were forced to file. They may think is means they have failed. In reality, many people in Wisconsin and across the U.S. file for bankruptcy every year, and very few are “failures.”
Bankruptcy is an economic transaction. It becomes necessary when your debts mount to a point where you can no longer pay them, short of selecting a miraculous winning lottery ticket. And most who file are not doing so because they had uncontrollable spending habits or who lack responsibility with their credit.
They file because they became ill or injured, incurred large medical bills and could not pay them because the often lost their job due to the injuries or illness and could no longer work. Others have to deal with a divorce and providing for two households on the same income.
And some do so because of problems with operating a business. One story details a man who began a successful window washing business in Green Bay. He was very successful and thought he could further improve his business by taking on other lines of work. That’s when the problems started.
He was inexperienced in running the larger operation, suffered some financing issues and had problems with employees, work not being completed and his accounts receivable suffered. His lender called in his loan, and he had little choice but to file for bankruptcy, as his liabilities far outweighed his assets.
Fortunately, he was able to learn from this lesson, and he slowly began to rebuild his business, carefully watching his bottom line and avoiding the too-fast growth that compromised his first business. Now is company is well regarded.
Sometimes life is a hard teacher, but bankruptcy should be seen as a tool for your business or personal finances, like any other, and when it is necessary, it should be used.
Source: greenbaypressgazette.com, “Entrepreneurs rebuild after bankruptcy,” Tina Dettman-Bielefeldt, July 14, 2015
