Thomas F. Miles, Attorney and Counselor at Law
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The impact of personal bankruptcy on your business

Many successful business owners go through a period of personal financial strain. For some, filing personal bankruptcy is the most effective way to move beyond serious financial turmoil. When a business owner seeks bankruptcy protection, he or she is often worried that the decision will have a negative impact on the business. While this is an understandable concern, there are a number of things that California business owners can do to minimize the degree to which personal bankruptcy will affect one's business.

Perhaps the most important step that a business owner can take is to craft a statement about the situation, and internalize that statement so that it is available when needed. People connected to the business will have concerns when they learn that an owner has filed for bankruptcy, and many will broach the subject. Having a statement prepared and rehearsed will make it easier to have a brief discussion of the matter and move on to more relevant topics.

A great place to begin is to acknowledge that a period of personal financial stress has occurred, and that a bankruptcy filing was the best way to address that problem. Follow up with an assurance that your legal team has the matter under control, and that a positive outcome is expected in the near future. It can also be helpful to emphasize that this personal matter will have no impact on the operation of the business. Close with a comment on future business plans or projections, which demonstrates that the focus of the conversation should be on business matters, and not on an owner's personal finances.

Once a bankruptcy statement has been drafted, it is important to practice issuing the statement so that it feels natural to do so when the need arises. Keep in mind that most people who will ask about a personal bankruptcy case are doing so out of concern for how the process might affect a California business, and the individual's own interests in that venture. Once they are assured that one's personal and business lives are separate, the topic of conversation can turn back toward business matters, which is a relief to all parties.

Source: Entrepreneur, "5 Tips for Dealing With a Personal Crisis or Health Issue While Running a Business", Michelle Goodman, Aug. 11, 2015

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Thomas F. Miles, Attorney and Counselor at Law
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