Should I file for bankruptcy?

From Jerry Harper, Lawrence, KS

Neither Mr. Gaebler or Mr. Wolkowitz, if quoted correctly, demonstrate any grasp of bankruptcy law and its application to Ron's situation.

It is unfortunate that your writer did not seek comments from persons actually schooled in the real world application of bankruptcy law to Ron's situation.

Ron has numerous options, some outside bankruptcy and some inside bankruptcy. There are numerous competent bankruptcy attorneys in Ron's hometown and in nearby Topeka, KS, who will go over his situation without charge and lay out the actual options that exist for him — including those that will allow him to salvage his business and have none of the longlasting negative consequences suggested in this unfortunate article.

From Trisha Ress

Regarding bankruptcy, you can and will recover from it. The idea that you are forever tainted is nonsense. But I would tell ANYONE to take out bankruptcy BEFORE a Republican Congress makes it so this can no longer be done and THIS is in the works, believe me. There are several empty installations in the US and the nasty rumor is that these will become debtors prisons. And you think Bush won't do THAT to you? Better think again!

From Carl, Martinez ,California

The respondent offered terrible advice. Recognize that the response was written by a business consultant, not an attorney. In his response he probably gave legal advice and engaged in the unauthorized practice of law. Moreover, business consultants are biased towards encouraging others to take risks, especially vulnerable debt-laden companies like the family business discussed in the article. The safe route for a company such as yours has no high end to a large business consultant. See the S&L meltdowns of the 1980's.
The ideal time to file for bankruptcy is generally immediately before an uptick in your personal finances because you may be able to get rid of debt through the bankruptcy and keep more of your post-bankruptcy assets to provide for your family or grow your business. However, there are many individual factors to study. Most bankruptcy attorneys offer free initial consultations. Speak with an attorney who specializes in bankruptcy to discover the best scenario for your individual case.

From Scott, Dallas, TX

One follow up note: I noticed that the advice you received in the "official response" to your question says that bankruptcy is a "permanent" black mark on your record. What a blatant lie! Nevermind the fact that even stars die off after billions of years and nothing is "permanent" in this universe, the relevant point is that Chapter 13 falls off your credit report after 7 years, and Chapter 7 after 10 years. Moreover, you can begin rebuilding your credit immediately upon discharge, which occurs much faster under Chapter 7. As far as a Chapter 11 business filing, this is not a personal bankruptcy, as the "official" responder even admits, so I find his opinion that you could never again own a business to be complete nonsense! If that were the case, would Donald Trump be back in business for the 53rd time?

From Scott, Dallas, TX

The problem with Mr. Gaebler's response is the phrase "the creditors would prefer…." That is also the problem with the United States in general. Corporatations can do whatever they want, whenever they want, and our laws treat them not like people — but BETTER than people! I, myself, am in Chapter 13 due to a combination of actions by creditors (i.e., coroporations) who used our corporate free-for-all system to screw me. I had a 720 average credit score when two big banks bought smaller banks and I had credit cards with the smaller banks. The big banks closed my accounts simply because they did not want to keep the small banks' customers on their books anymore. This, of course, caused my credit available to vanish, my credit history to dramatically shorten, and ultimately my credit score to plunge. In the meantime, another credit card lowered my score due to the effects of the other banks' actions and yet another closed my account because they had 8-year-old income information for me still in their records and thought I didn't make enough money to support the credit limit I had. Nevermind the fact that 8 years prior I was a graduate student making no money. Too bad, their system doesn't allow updates for another 6 months! Then, and this is more relevant to today's world, I was lied to by my mortgage lender when they told me that I could qaulify for a new home at the same interest rate and terms as the existing conventional mortgage on my old house. However, that was a lie, and once I was living in temporary housing and waiting to move in to my new house, and after sinking thousands into its construction, they said at the last minute "Oh, sorry, you have to do an 80/20 low-doc loan at much higher interest" if you want this house. The bottom line is, corporate America is a bunch of dirt bags whose time is coming to an end. If you need to get out of debt, file bankruptcy. There is no equivalent. These "work-out" plans the creditors prefer (as if you should EVER do what your creditors "prefer" – please!) are a joke. If you are even one nano-second late on a work-out plan payment, you will forfeit all of that money and the remainder of the balance (plus usury interest rates!) will be due in full. You will have gotten nowhere! The only reason I would say you should not file bankruptcy in your specific case is because the amount you owe is relatively small and you may be able to simply close shop depending on how your business is structured, incorporated or not, etc. But please do not listen to any "professional" who is beholden to corporate America: this includes financial planners, stock brokers, and physicians (especially psychiatrists, though psychologists are fine b/c they aren't drug-pushers for the pharmaceutical industry). And "for the love of God and all things holy," do not read financial analysts' reports or recommendations, which are made as they see the world through rose-colored lenses (b/d if they say anything remotely neutral, much less NEGATIVE (oh my!), they are summarily fired).