At the age of 20, Milwaukee resident Nick Ruiz got into the house flipping business, putting the down payments for two houses on his credit card, renting them out for a while, then selling them for a profit. After doing this for several years, he’d built a net worth of more than $2 million.
Then the housing market crashed in 2008, and Ruiz lost his properties and most of his income. He declared personal bankruptcy and lost everything but his house and car.
Like many other business owners who have filed for bankruptcy, Ruiz discovered there are opportunities for a second chance. He got back into real estate without borrowing from banks, flipping houses without taking ownership of them, and renting and rehabbing homes. Within a year, he was solidly in business again.
Anyone who runs a small business and is struggling with debt doesn’t need to worry that personal bankruptcy will make it impossible to start a new business. In the world of business, there are always opportunities to start over.
How Can You Start a New Business After Bankruptcy?
Five years after the housing market crashed, Ruiz had started a second venture called Alpha Home Flipping, offering online courses and one-on-one coaching for a fee to aspiring entrepreneurs. His road to renewed success started with rebuilding his credit. He got a secured credit card and paid it down each month. That helped to improve his credit score within a year, and despite having a bankruptcy on his credit report, he again qualified for a car loan.
There are different reasons why small businesses don’t succeed, but there’s no question that when it comes to bankruptcy and starting over, rebuilding credit is a crucial first step.
Today, several businesses fail and disappear, but there are certainly business owners who have been able to pick themselves up and find ways to start over. One thing many of them do the second time around is learn from the past by reflecting on why their company failed. Even if it seems like bankruptcy has left you with ruined credit, many people have been able to make strong, even remarkable, financial comebacks.
Sometimes things happen that will hurt your business but are totally outside your control, such as a serious downturn in the economy like a recession. But in many circumstances, the second go-round gives you the new knowledge to understand what risks and pitfalls to avoid in the future.
How to Rebuild Your Credit After Bankruptcy
Nothing prevents you from starting a new business after a bankruptcy filing. You will have the challenge of obtaining credit for starting a new business. Bankruptcy can be your new beginning because it will enable you to get rid of your personal responsibility for business debt.
Understand that after a personal bankruptcy, your credit will take a hit, so for your next business creative financial planning will be in order. You know banks and other lenders will ask about your personal credit history, but there are ways to increase your chance of approval. That includes:
- Putting together a comprehensive business plan first
- Detailing how you expect the new business to succeed
- Potentially finding a partnership with someone who has good credit
- Seeking financing through a community bank rather than a larger one
- Finding investors to help fund your business
It’s also possible to start a business that doesn’t require much in the way of operating capital, where you’re providing personal services to customers. You could also work as a contractor for others to help establish your credentials. Independent contractor opportunities are flourishing today in the gig economy.
It’s also a smart idea to get the advice of an experienced bankruptcy attorney, someone who has advised countless consumers and small business owners about their options after a bankruptcy. If you’re feeling financial distress while operating your business, an experienced bankruptcy attorney can shepherd you through this complex and challenging process.
Trust an Experienced Bankruptcy Attorney in Louisiana
When you’re considering this process, a good bankruptcy attorney can help you understand which approach to bankruptcy is going to work best for your situation, and how to best proceed afterward.
Orum Young Law has more than 35 years helping the people of Northeastern Louisiana file for bankruptcy and regain control of their finances. In those 35 years, we have filed more than 20,000 cases and experienced unbelievable success. We help our clients understand the basic aspects of their case, including how to determine their expenses and handle any necessary filings.
Contact us today at (318) 450-3192 to schedule your free case review and start protecting your family’s future.
