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When to give up on a business
Q: We have been in business for 5 years. Right now we have no cash flow, and have a number of debts across the board, payroll taxes, sales tax, vendor bills and others. We have managed to find cash and borrow in the past, but when do you say enough is enough and give up? Is there any way to judge this through some economic indicators or is it just a guess?
A: The answer to your question is more subjective than objective. I practiced bankruptcy law for many years and found with my clients that they knew when it was time to get help. For some people, $10,000 in debt was too much, for others, the number was $100,000. It all depends upon how much stress you can take. When it gets to the point where you can't sleep and the stress is really getting to you, then I would say you have reached your limit.
If that is the case, you can either close shop and pay off your bills, or file a Chapter 7 bankruptcy. The good news is that bankruptcy is far from the monster most people think it is. Rather, it is a safe harbor in the storm and a chance to wipe out all debt. Even better, within two years, your credit will be back to normal again. If you want to learn more, check out my book Ask a Lawyer: Debt and Bankruptcy.
Some issues discussed in the expert forum are complex and continually changing.We recommend you consult a professional advisor about your specific circumstances, needs, and applicable laws. More details.