F1A 1 | File For Bankruptcy

 

The entrepreneurial path can be quite a treacherous ride. It is inevitable not to get bumps and bruises along the way. Some even had to file for bankruptcy. Even so, these shouldn’t stop you from pursuing business success. Kicking off the show to a great start, host Vera McCoy, Esq. is joined by a retired attorney, Jeff Saper. As someone who has assisted over 1700 families and small businesses either wipe out or restructure their debt, Jeff provides some valuable insights around bankruptcy and how we can overcome this seemingly endpoint for many entrepreneurs. He breaks down the bankruptcy code and each chapter you must get yourself familiar with. He also discusses when you may need to file bankruptcy and what happens when, if push comes to shove, you don’t. 

Listen to the podcast here:

A Fresh Start: Understanding What It Means To File For Bankruptcy With Jeff Saper

I’m excited that you decided to join me for what I know will become a great resource for new and seasoned entrepreneurs, want to be entrepreneurs, and even some 9:00 to 5:00-ers. Whether you’re an entrepreneur and investor or an individual who has an idea that you want to transform into a business, Financial First Aid is here to help you move in the right direction from idea to development to implementation. My primary area of practice has been bankruptcy and real estate.

This show is also directed at entrepreneurs who may have filed bankruptcy in the past, entrepreneurs who are considering bankruptcy and those who are presently in bankruptcy. We want to give you information and motivation that will help you at whatever stage of your entrepreneurial journey you’re at. Perhaps you will decide that being an entrepreneur is a perfect fit for you or you may decide that this isn’t what you want to do and bankruptcy is what you need. Either way, our mission is to inform, motivate and have honest conversations about what it takes to be an entrepreneur.

Who am I? I have had the great blessing and fortune, sometimes misfortune, to have been a lifelong entrepreneur. I’ve been employed by others, but I’ve never managed to stay long. I’ve been a business owner. My mother and I have had a nursery school and daycare center. Imagine going to work every day and playing with kids from 1 to 8 years old. It was a lot of fun. After graduating from law school, I started my own practice. Yes, operating a law firm is a business. Now, I’m focusing on growing and developing my real estate investment firm and becoming a great podcaster.

This episode features a good friend of mine. His name is Jeff Saper. He’s a retired attorney who’s practicing in New Jersey. Jeff has assisted clients for many years. He’s licensed in New Jersey and he has helped over 1,700 families and small businesses either wipe out or restructure their debt. He spends most of his time now as a grandfather and as in-house counsel for his wife’s property management business and mentoring other attorneys. I met Jeff back in 1992 when my mother and I filed for bankruptcy. Jeff, it’s great to see you. How are you?

I’m fine, Vera. I hope that you’re the same.

Yes, I am. How are those grandchildren?

They’re great. I watched 2 out of 3. The older boy thinks he’s a professional wrestler. The younger boy thinks he’s the older boy and the girl thinks she is a princess.

I like to discuss, first of all, the types of bankruptcy. There’s Chapter 7, Chapter 13, Chapter 11. Could you give us an idea, an overview of Chapter 7?

Chapter 7 is designed to wipe out debt, relieve a person of the responsibility to pay the debt. You file with the court in all Chapters everything you own, everything you owe, income coming in, income going out, depending on what kind of debt that you have and what kind of extra expenses you have. If it’s more than you can afford to pay back after your basic expenses, food, clothing, shelter, rent, mortgage, car payments, gas, insurance, and all of that. If you don’t have enough money to pay it back, you’re never going to win with the people you owe money to because they don’t care.

A trustee is usually a bankruptcy attorney that works for creditors. Click To Tweet

The Bankruptcy Code, which is what all bankruptcy is based on, is federal law not state law, which means it’s the same everywhere in the country. It’s based on the difference between secured debt and unsecured debt. When I say secured, that means that the person or company you owe money to has a lien on your collateral. A mortgage has a mortgage loan. The mortgage is if I don’t pay, I can take the house back. That’s what a foreclosure is. If you have a car loan, they have a lien on your car. If you don’t pay the car loan, they can take it back. That’s totally different from unsecured debt. Unsecured debt can be credit cards, doctor bills, hospital bills, and they sometimes can even be certain kinds of debt that you can’t get rid of in bankruptcy.

The most common of those are tax debts. If you owe income tax or if you’re a business owner, sales tax or payroll tax. Although some people think they can get out of paying it by filing a bankruptcy, child support or alimony, it isn’t going away. It’s specific in the code. You can file all of this. When I first met you, when I first started practicing in ‘92, a simple bankruptcy petition was under 30 pages. It’s now over 60 pages. In 2004, 2005, Congress passed a law that made it much more difficult for people to file bankruptcy. Not because you and I and the 99% were cheating by filing, but because people, entertainers, sports figures, people that had millions of dollars of debt were trying to get rid of it. It’s like somebody suing you, but they haven’t finished suing you and get what we call a judgment yet.

You file a bankruptcy. That’s where the most important part of the bankruptcy code comes in. It’s called Section 362 and it’s called an automatic stay. They can’t call you. They can’t contact you. If they are suing you, but they don’t have a judgment, they can’t get one. They are staid. In other words, they can’t take any action against you. If they have a judgment, if that judgment was within 90 days of the day you file your petition with the court, it’s void, of no good. It gets erased. You file all these 60 pages with the court. About a month after you filed, you’re going to go with your attorney. Most people do have an attorney, but you don’t have to have an attorney. There are still people that file on the road. You meet with a trustee. A trustee is usually a bankruptcy attorney that works for creditors, people that are owed money. They review your petition.

My world’s record for a hearing is two minutes. I have had them last as long as half an hour. That person’s job is to look over your petition and they’re not looking to collect money. They want to see if you have anything that they can sell off, turn into cash, to pay the creditors. In 95% of the cases, there are no assets, things that you own that can be sold off. Why? In the bankruptcy code, you are allowed exemptions, things that you are allowed to keep. So much for equity in your house, a car, for tools of the trade if you’re a craftsperson. Our job as attorneys is to try to have you keep everything you own and not selling anything off. Trustee writes your report. About a month after that, you get what’s called a discharge. A discharge wipes out the debt. It doesn’t get rid of judgments, but we can talk about that later. There’s a way to do that but it’s done in state court at a later time. That’s a Chapter 7. Two-thirds of all bankruptcies that are filed are Chapter 7s.

What if you have money? What if you have $20,000 in credit card debt and you’re paying what your balances are going down or what happens if you fell behind on your mortgage? I can’t catch up because every time I have two months’ worth, they want three months. Every time I have three months, they want four months. That’s what a Chapter 13 is. Chapter 13 is a payment plan. There’s a different trustee. That trustee collects money from a plan that you file with the court. “I’m going to pay for this. I’m not going to pay that.” There are many different kinds of Chapter 13 bankruptcies that you can file. Most people that file Chapter 13s are trying to save their house. If you have a house that’s worth $100,000 and you owe $150,000, that house is not worth keeping.

What you can do is buy that person time. If they’ve started a foreclosure, they cannot continue that foreclosure in state court while you are in bankruptcy. Once you get rid of the bankruptcy, the debt, the loan is wiped out, but they can start up again in the foreclosure. In New Jersey, that can take two years. I used to tell my client, “Take $500 a month, stuff it under a pillow somewhere and do that for two years. By the time you have to leave the house,” that’s as long as it takes for a foreclosure, “You’ll have money to go somewhere.” Sign a lease for two years. People are like, “I’ll never get a house again if I do that.” Not true. You can loan two years after the date of your discharge. You can get a car loan the day after you’re discharged. Why? When you get a discharge, a court order, you are debt-free. You don’t owe any money to anybody, except if it stacks that job support or alimony, which you have to pay anyway.

That’s one of the things we’ll explore a little bit later when I get into why people should or shouldn’t or what advantages there are to bankruptcy. Last but not least, which is not the last one, but Chapter 11. That’s what a lot of our readers would be interested in because if they’re entrepreneurs, that would be the type that they would file. Can you get into that?

Out of my 1,700 cases, I did about 60 Chapter 11s for small businesses, $1 million to $3 million a year businesses. Chapter 11 can be done by a company, a corporation, an LLC or even by an individual. Some entrepreneurs do not realize that when they sign for a lease or buy equipment or something to connect it with their company, there’s a 99% chance that they are going to be held personally liable. Chapter 11 is reorganization. It allows the owner of that business to stay in business while they are making choices. There are many things that you can do in Chapter 11 that you cannot do in any other chapters because there is no trustee looking over your shoulder except the United States trustee, but not to confuse things. It’s a complicated plan.

If you go to the big firms, which I will not name, in Haddonfield, and Moorestown, if you don’t have $50,000 to $75,000 in your pocket, they don’t want to deal with you. It’s not worth their time. You can file. I used to charge $15,000 to $25,000 for those. Not everybody has that, but in a business, you can divert some of the cashflow in order to pay your attorney fees. A filing of that nature is maybe 120 pages, plus all kinds of documents like your accounts receivable, your accounts payable, all your financial records. If you’re like a lot of people, “I was a great carpenter, but I don’t know squat about running a carpentry business,” you have a problem.

You have to have financial records because it will be reviewed by the United States Trustee’s Office, which is part of the Department of Justice, which is where the attorney general is in charge. It’s a serious business. You don’t play games. You don’t file to buy time. However, in Chapter 11, there are things you can do. You have a lease for five years on three buildings, you can say, “I’m going to keep one. I’m going to get rid of the two others.” You can do that. You have all the powers of a trustee. You also have all the responsibilities of a trustee. Not to get too involved in it but if you qualify and you need an attorney and an experienced bankruptcy attorney who does that kind of work, not a person who does Chapter 7s and 13s.

F1A 1 | File For Bankruptcy

File For Bankruptcy: If you don’t have enough money to pay your debt back, you’re never going to win with the people that you owe money to because they don’t care.

 

If you’re going to do a Chapter 11, you’d better get somebody that knows how to do a Chapter 11. They will tell you what you can and cannot do. Typically, they take 6 to 98 months to get a plan approved by the court. Sometimes I’ve had cases go as long as 1.5 years. I’ve had cases where I finally got a plan approved, it was my 5th or 6th amended plan. You will be fighting the attorneys from high-end firms, banks, mortgage companies. Trust me, they will try to crush you, but there is a way to get around it. I had a fairly good success rate, but for an entrepreneur, which is where you’re dealing with, is it worth doing a Chapter 11? Should they do a Chapter 7 and say, “Mr. Trustee, here you go. Here’s everything I own. You can take all the assets of the business, leave me personally alone.” That can also be done. For those who have heard about Chapter 11s but don’t know anything about it, it’s the same Chapter 11 done by our president three times.

I’ll only tell you two things about him without commenting. Number one, the 1st of the 3 bankruptcies that were filed were 21 separate corporations consolidated into one case. In his first bankruptcy, Trump wiped out $550 million of debt. I ended up doing bankruptcy for one of the subcontractors that didn’t get paid because they can get paid 100%, 5% or 0%, depending on what the court approves as your plan. The only other thing I will say about him is two things. Number one, everything he did was legal according to the bankruptcy code.

Is it ethical? No. Legal? Yes. He had the best attorneys on this planet. He knew exactly what he was doing. For a bankruptcy attorney, especially one that does Chapter 11s, it is an ode to brilliance. What they managed to do was brilliant. Unfortunately, a lot of little people got crushed and never got paid. If you are an entrepreneur, you want to know what the difference is between a 7 and a 13. I had somebody pay off $165,000 to the state in back taxes for their business under a personal Chapter 13, because on taxes, as you know, Vera, you have personal responsibility. We’re hitting him by the corporation. He didn’t want to lose his house. We paid it back. It took him five years. All the taxes got paid. Were all his credit cards paid? No. I don’t have a problem not paying the medical profession, hospitals, credit card companies, insurance companies, banks, the mortgage company. I have no sympathy for them. I never did and I never will.

Chapter 7, why does a person file? As you know, I’m good with figures. I said if you have $10,000 worth of credit card debt and you fall behind, the first month you fall behind, your payments are late. When you pay February for January in March, every month is late and the late fee gets added onto your bounds. Sooner or later, you’re going to hit your credit limit. $29 to $39 a month, late fee every month, $29 to $39 every month for over the limit fee. The interest, which on a typical credit card is 24%, that’s 2% per month. I figured out that for every $1,000 in debt that you have on a credit card, you can pay $110 a month and your balance won’t go down one penny. That’s economic slavery.

Renting a house or an apartment for two years is not the end of the world. Click To Tweet

That’s why you and I don’t feel bad when we discharged those kinds of debts.

I don’t blame a lot of people that got caught up in mortgages on houses they couldn’t afford because way back when, and you’ll remember, if you made $500 a week, they sold you a $275,000 house that you had no business buying. “Don’t worry. It’s an adjustable mortgage.” In the first year, it was only $1,000 a month. In the second year, it goes up to $1,200 a month. You go, “I can handle that.” By the fifth year, this thing is $2,000 a month. You’re like, “What did I buy?” It is economic slavery if you think of it in terms of that. I’ll give you the test, Vera. What’s the number one reason that people file Chapter 7 bankruptcy? For fifteen years, the number one reason was divorce. I don’t know of many households that have one person working. If one person loses their job, and Lord knows with COVID-19 that’s happened to millions of people. Now you lose your job. You lose your job, you lose your health insurance. Now, something happens when there’s a $5,000 bill and medical bills. When you can’t pay your credit cards, now husband and wife start fighting and they go, “That’s it. We’re getting a divorce.” Somebody is getting stuck with it.

The credit card companies don’t care or I shouldn’t say the credit card companies. All your creditors, who are those people that you’re going to file against when you file this bankruptcy, they don’t care where you get the money from as long as they get their money.

What happens when you don’t file bankruptcy and they keep going after you? First comes what’s called an information subpoena. Tell me everything you own, everything you owe and your income. They can do three things. Number one, if you’re working, they can garnish your wages. Number two, they can get a judgment and put a lien on your house. They won’t get their money right away, but you can’t do anything about ever selling that house without getting paid. Number three, they can go after your assets, particularly bank levies. “I went to my bank this morning and there’s no money left in my account.”

Let’s talk about that a little bit. What would be the real advantage to people for them to file bankruptcy? That’s why this show is going to help some people decide, “Maybe bankruptcy is the right thing for me especially if I’m an entrepreneur, because not only do I have my personal debts, but I also have my business debts.” How do you help somebody make that decision and when should they come to someone like you or I to make that decision?

The first thing they should do is come before you know what hits the fan, not after. That’s helpful. We have both dealt with many clients who come to you when it’s too late to do anything about it.

The morning of a sheriff sale. In New Jersey, they start at 12:00. You have to file that before 12:00 in the afternoon.

If you remember the old days before we had electronic filing, you had to do it on foot to the clerk’s office. I remember one day, I got there at about 11:54 or 11:55. I had already called the attorney and said, “I’m going to be filing this.” “Sure. I hear that all the time.” “I’m telling you, you’re going to hold the Sheriff’s sale and I’m going to have the stamp to the minute.” I literally held on to that petition until about 11:58. He handed it in to be stamped. I’ll play nice. If you’re an attorney that keeps on talking about your house and your money and your car, we both know a prominent attorney who used to walk up to us in court and said, “I’m taking your client’s car away. It’s my car.” No, it’s not. It belongs to Ford.

I did that once and I held on to it. The first thing is that Section 362, the automatic stay. It stops all the action. It gives you a chance to exhale and breathe. What is important, and I know you do it and that I’m notorious for doing it, don’t go through a bankruptcy attorney who does not explain to you the effect of the filing of a bankruptcy. I would guess that 3 out of 4 people who don’t file bankruptcy don’t file it because they’re scared it’s going to ruin their life and they’ll never get credit again. That is simply not true.

I hear that all the time before. “I don’t know if I should file.” I said, “Don’t ever get caught up in thinking that you can’t get a car within 24 hours of getting your discharge because that’s what happens.” The same credit card people that you discharged, they’re chomping at the bits to give you another credit card. Whether or not you take them up on it, that’s your decision.

Tell everybody what happens the day after discharge. What comes in the mail?

F1A 1 | File For Bankruptcy

File For Bankruptcy: When you file for bankruptcy, your credit card companies don’t care where you get the money from as long as you get it and as long as they get their money.

 

It’s an invitation. They may start you low too. They may beat you with $1,500, but on the other side of that, the good thing about that is that’s your opportunity to begin to rebuild your credit life.

As I always tell people, get one card, use it every month because having a card and not using it doesn’t help. For every $10 that you charge, pay $8. There are three things they look at. Do you have new credit? Do you use new credit? Do you keep the balance at 20% of your credit limit or less? That is important. Nobody will tell you that. If a bankruptcy attorney doesn’t tell you that, they’re not doing the job. You went for two years renting a house or an apartment. Renting a house or an apartment for two years is not the end of the world. We have life, liberty and the pursuit of happiness. There’s nothing there that says, “Everybody gets a house.” My parents didn’t have a house until he was in his 40s. My grandparents never owned anything.

Quite honestly, some people don’t want to be house owners. They don’t mind renting at all. Some don’t want the responsibility. For some people, their jobs take them to many different places. They’re migratory, “Why should I settle in one spot when in two years I’m going to be moving somewhere else anyway?” Even if it’s not their job, their own career. They may decide that they don’t want to be stationed in one spot and stay there for the next 30 years. Banks give out 30-year mortgages and everybody doesn’t want to be stuck with a 30-year mortgage.

Especially if you’re in your 50s. There are two more things. Number one, for fifteen years in a row, it was divorce. In 2019, there was a new winner. You take a wild guess of what is the number one reason why people file. It’s not credit cards.

Medical expenses?

Bingo.

It’s costly to get sick in this country.

Why is that? I had insurance. I lost my job, now I don’t have insurance. I once had a bankruptcy trustee at a hearing question my poor little old man that said, “You used your credit card for $100.” That was way back when, “Within 90 days of the date of filing,” which is a no-no. You’re not supposed to run up the credit cards before you file. They’re supposed to tell you that too. He said, “What did you do with that money?” “My medication.” He says, “What do you mean?” “I figured I had a choice between buying food or buying my prescription. If I bought my medication, but I didn’t buy food, I might be hungry or I’ll eat peanut butter and jelly for a week. If I didn’t buy my medication, I’ll be dead, so I used it.”

All of a sudden, the trustee, stone silence. That’s the choice that people are having to make. If you get to that point where all of a sudden, God forbid, you have to go to the hospital. I don’t practice full-time anymore because I have a heart condition. Years ago, something went with my pacemaker and it went off and they had to put me in one night overnight. How much? $10,000 for one night in a hospital. I ended up paying whatever it was, like $800 or whatever, for my copays. Thank God I had insurance to cover the rest. What if I didn’t? What if I didn’t have that? That’s the number one reason. The other thing that you have to know about restoring your credit that people say, “This will be on my credit report for ten years,” because it’s a court record. It’s for seven years.

Let me go back one step. Everybody’s credit score is run by something called FICO. That’s where the credit scores are run. There are three credit bureaus, Experian, Equifax, and TransUnion. Each one of them has four different score programs depending on if you’re buying a car, getting a credit card, renting, whatever. Your credit score is based on the debt that you have and how you pay it or not pay it or if you were late. The filing of a bankruptcy by itself does not and cannot, under federal law, Federal Debt Reporting Act, affect your credit score.

It’s the debts themselves and how they are reported. You can change that after you go through a bankruptcy and get a discharge. No offense to Citibank, they’ll pick you out, late pay. All they’re allowed to say is discharge Chapter 7, date. It goes into the neutral column. People say, “If I can do that, does that cost money?” I used to do it for clients, but it’s expensive for an attorney to do. I made a whole little program and people do it themselves and they go, “I went up 75 points or 100 points.” Literally, not exaggerating, “Good, now get a car loan for the cheapest car you can get, $150 a month. Pay it every month.” What they look at your credit score is a mortgage and a car loan first. Secured debt, then they look at everything else. If you need money, take a few hundred dollars, open up a bank account, get a debit card. When you need to borrow something, whose money are you borrowing? Your own. What’s the interest rate on that? Zero.

Can you give us some resources that would help people to decide when do I need to file bankruptcy? Why am I feeling this whole thing, trying to figure this out? What are some resources that we can use that we can tell our readers about when they should do this?

Number one, do not rely on the internet. How many times have you heard me say, “Do not confuse your Google search with my Law degree?” The internet is great for finding videos and stuff like that. It’s not great, with all due respect to people who do this, for non-lawyers to give advice. If you don’t have money to see a lawyer, if it’s that bad, you can call your bar association and there are two ways they can help you. Number one, they have a legal referral service where there are certain attorneys who will see you without charging you for an initial consultation. If anybody tries to charge you for an initial consultation, it could be 30 minutes, an hour. They’re not the lawyer you want. There are also people who do a certain amount of what we call pro bono work where they will take on a certain number of cases every year. We are required to do that by the State of New Jersey for free or sometimes for reduced costs.

If you're going to contemplate bankruptcy, call a bankruptcy attorney. Click To Tweet

Let’s say a Chapter 7, most attorneys nowadays in Gloucester, Camden, Burlington County cost you about $1,000, maybe $1,200 in an attorney fee. There’s a filing fee for the court that you have to pay. If you are broke, you could get that waived. That’s $331. Most people pay the $331, but there are plenty of attorneys. Not all attorneys are bad. The people that represent debtors, people that own money in bankruptcy, and you and I are in a small club and there’s not many of us around. There are people who care and will help. I used to set up payment plans. I’m not going to follow you tomorrow morning with $100 or $200.

I said, “If you do this, this and this for the next two months, here’s what will or will not happen that could hurt you. If you filed by this date and that date, we can still file the petition, but I’m not going to do it for $100 and $200,” depending on the individual person and their circumstances. We do feel sorry for people. What is it? Bad things happen to good people particularly single moms with no child support and senior citizens. That’s my soft spot. It always has been. If you’ve paid taxes and work for 40 or 50 years and want to enjoy your retirement, I’m not letting Citibank and a hospital and the mortgage company and GMAC ruin your retirement. That’s the other thing that is important. Filing bankruptcy is not to solve your financial problems.

That’s the other area I want you to get into. What are the real challenges?

Your health and wellbeing, and that wellbeing and health of your family. “My husband is going to have a stroke or a heart attack because of the stress and the pressure. He can’t take it anymore. My wife gets all the bills and she throws them in the trash and rips it up and I never get to see what’s going on. Now she started drinking or using some medicine or drug.” It takes a mental toll and physical toll sometimes. When I stopped actively practicing and I had to close my office, a year after that I get a call from one of my law school buddies who was helping this guy get a Social Security disability. He said, “You’ve got to help this guy.” The man was 350 pounds, 5’4”. He had some medical condition where he was retaining something like 75 to 100 pounds’ worth of water weight.

The man was on every drug you can imagine. Anti-anxiety, anti-stress. You and I both know that’s not a place you want to be. He was desperate. He didn’t have a lot of debt, but people wouldn’t leave him alone. He was going to die of stress within 2, 3 months. I could see it on his face. When you’ve done 1,700 cases, you can size it up after a while. After fifteen minutes, I go, “Relax. We’re going to work this out.” I got him his discharge. He called me on my birthday two years later to thank me again for getting his life back because now he got his life back. That’s what a good attorney, you and I included, can do for people. That’s why when you introduced me, I didn’t say I helped 1,700 individuals, I said families. That’s what you helped. You help restore the families.

I have gone shopping at the supermarket with my wife and somebody comes up to me, and it does happen once or twice every year, “Jeff Saper?” I don’t remember who they are. “My name’s Jane Doe. You did my bankruptcy five years ago. Is that your wife? I want to let you know your husband is the greatest thing. He kept on telling us it’ll be okay. We bought a house last year and everything’s fine. We followed his directions and I feel like I got my life back.” That is more gratifying to me than any money anybody’s ever paid because I helped them put their lives back together. I kept the family intact. If anybody thinks you’re entrepreneurs, unless it is a husband and wife both dealing in that business, if it’s 1 out of the 2 and the other, one’s not involved, they don’t know the stress level that’s involved of living in the constant fear of debt.

That’s the perfect way for you to say that. It’s why doing what we do sometimes, it’s like you say, not only saves that individual, but it does save families and helps everybody out all the way around.

You had asked me for other resources.

The second one to google is definitely not family and friends because the conventional wisdom, which is, “It will stay on your credit report forever. You’ll never be able to buy a house. Don’t file bankruptcy.” All the while, this poor person is living in all this stress because they don’t know.

F1A 1 | File For Bankruptcy

File For Bankruptcy: Three out of four people who don’t file bankruptcy don’t file it because they’re scared it’s going to ruin their lives, and they’ll never get credit again. That is simply not true.

 

That stress and fear are not only mental, it can manifest itself physically like Ulcerative colitis. Do you want to live with that all the time? No. For people with Crohn’s disease and anybody that has a pre-existing medical condition, that stress will make it worse. Any medical doctor will tell you that stress makes about every condition worse. God forbid they have the serious diseases they’ve been diagnosed with some kind of cancer and they’re undergoing chemo. You have enough on your plate. You worry about getting yourself healthy. You don’t need to be worried about this stuff. This is chicken, and I don’t mean chicken salad. Another good resource, and I’m not endorsing them, I can think of one name on my mind, which is Credit Counseling Services of America.

Any credit counseling service, they are free.

They’re free and they are not political. Some of them do have attorneys. A lot of them have what we call paralegals right now who are not attorneys but are knowledgeable. Sometimes more knowledgeable than attorneys. They will sit down and everything that we’ve talked about, they will have down in writing and they can give you, not as an attorney, but as a well-educated, well-trained individual, a good assessment of where you’re at. The decision on whether to file and more importantly, if you’re going to file which chapter you file and how you go about it and what decisions you make, that’s yours. You don’t have to do this alone. Credit counseling services are extremely helpful. The only thing I would say other than not going to family and friends and Google, if you’re going to see an attorney, please do not see an attorney whose practice includes 60 different things, and at the end of the list is bankruptcy.

If you’re going to contemplate bankruptcy, call a bankruptcy attorney and the bar association to give you a list. They’ll give you at least three right off the bat. This is what these people do. That’s who you want to talk to. Don’t be scared. It’s not the end of the world. Your entrepreneur friends, especially a lot of new businesses fail. They don’t fail because the people are stupid or that they can’t run a business or that they can’t get it together. Some people are not made to run a business. You have said this to me. I remember that very well. You could be a great carpenter, but you’re either not good at or you don’t like the business end of your business, then don’t have one. Clean up your mess and move on.

This whole show is about helping you, as an entrepreneur or want to be entrepreneur, make that decision and help guide you through all the travails of being an entrepreneur. It’s not made for everybody.

It’s like owning a house, it’s not made for everybody.

The purpose of bankruptcy is to allow honest debtors a fresh start. Click To Tweet

What are three takeaways that you would give to entrepreneurs who are out there, who are on the fence about bankruptcy or need some guidance?

Number one, write down, because a lot of people have never literally written down what you own, what you owe, the income that you have coming in, whether it’s through your business or any other source or a second income from a spouse and what your real expenses are. When I say real expenses, we’re talking real world here. Not $165 a month for my wife to get her hair done. No, that is a luxury. That is not a necessary expense. We both know the magic phrase in the bankruptcy code. Reasonable and necessary. Once you figure out what you own and what you owe, both for your business, if you already have a business, and personally, and then you look at your income and expenses, you will know right away.

You may not like the answer, but you’ll know right away how much trouble you’re in. If you’re running at a deficit, you’ve got problems. You can’t keep spending and spending unless you’re the federal government, in which case you keep printing more money, but that’s not what we’re supposed to do. Number two, get assistance. Be it a bankruptcy attorney, be it a credit counseling, but get somebody who knows more than you do, because you don’t know what you don’t know. Trust me, my wife always says, “You can’t answer me on what you did yesterday, but you can quote sections of the bankruptcy code.” I can. I’ve been doing it for over a quarter of a century. Number three takeaway, if you have to file to get yourself started, do not think it’s the end of the world because it’s not.

I always tell them, “Think of it as a fresh start, a clean slate. You’re going to be a lot better off for having done it and move on with your life.”

If you look at the Bankruptcy Code Section 101 or 102, it says, “The purpose of bankruptcy is to allow honest debtors a fresh start.” They use that phrase. You can make a fresh start at twenty years old and you can make a fresh start at 80 years old.

Thank you for being with me. I enjoyed it. I hope our readers do. What I’ll do is I’ll probably have you on another time so we can get into even more information and thanks a lot.

Stay blessed.

Thanks.

Important Links: