Filing for Chapter 7 bankruptcy doesn’t carry the stigma that it once did. More Americans are feeling the crunch of these uncertain financial times, so getting out of debt is considered more of a plus than a negative these days.
But it does carry some baggage with it. For instance, what if you want to open a business but have recently filed for bankruptcy? Is this where your dreams come to die?
You can start a business after bankruptcy
Future entrepreneurs can take heart from the news that it is possible to open a business following bankruptcy. This is not to say that it won’t be challenging, but it is possible. Below are some challenges you could face — and possible solutions.
Getting a business loan
Unless you have your own available capital (which is unlikely if you just filed for bankruptcy), you will need funding to open your business. Getting a traditional loan from a bank or other lending institute is more difficult after a Chapter & bankruptcy. But it is not impossible. The more time that has elapsed since the discharge of your debts and the time that you apply for your loan, the better your chances will be of getting funded.
Your interest rates will be higher
Yes, you won’t be eligible for the lowest interest rates for which non-filers may qualify, but you can still be in the game.
Think outside the business box
The Small Business Administration (SBA) recommends opening a business that needs little capital to get off the ground. Consider consulting or opening a service start-up, like walking dogs, becoming a personal shopper or cleaning up new builds.
You may need a co-signer
Consider taking on a silent (or not) partner who can provide the funding while you contribute sweat equity to equalize your partnership.
To sum it up, Chapter 7 bankruptcy affects your financial future. But in reality, your fiscal future wasn’t all that bright before you filed for bankruptcy. Once your debts are discharged, you have a clear path ahead to success in future ventures — both business and personal.