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Bankruptcy and how to get a fresh start

14 April 2022

Bankruptcy and how to get a fresh start Bankruptcy and how to get a fresh start

Bankruptcy and how to get a fresh start.


Welcome back. I am Sergey Patrikeev at BizBaby and we will discuss the last resort weapon in our business and personal arsenal.

Bankruptcy! That word doesn’t need introductions or explanations. You’ve fought and fought again and you found yourself in a situation you might not get out of. Warm up to that word, it’s not the end. It’s far from it. 

Let’s be honest, you can’t always win. Sometimes you will lose. But let’s ensure you lose spectacularly! We don’t go down without fireworks and definitely not without tons of things learned along the way.


My favourite poem by Dylan Thomas:

Do not go gentle into that good night,

Old age should burn and rave at close of day;

Rage, rage against the dying of the light.


Actually, a perfect loss could be better than a slow and dragging win.

What I mean by that, is that you don’t declare bankruptcy for a minor debt or unpaid credit cards. You don’t close the business because it slowly became less and less busy over the years until you had nothing but to close doors. 

If that happened, then perhaps owning business is not something you are excited about and perhaps you shouldn’t waste your time on it. 

You have other talents and focusing your time on those is a wise decision.

Before considering to pull the trigger, consider consulting with the BizBaby team, we can take a good look at your business situation and perhaps there is still a solution to your problem. Otherwise we can direct you towards that spectacular exit

However, let’s imagine that you did everything you could, you did all the steps in the previous article and more, and it’s not helping, you are sinking and sinking fast. Or perhaps you have been sued or got some significant penalties or unexpected judgement against you or your business. 

Since there is no more turning back, why not try something completely outrageous?

Let’s say your business consists of many different services or products. Which one was the most profitable? 

Have you thought of raising the price significantly and stopping all other offerings completely? Perhaps you could even do it from a smaller space or even from home?

Imagine you had a bakery that was selling regular baking goods in store to walk in customers, and you had a few commercial clients (hotels) that paid a premium for a special kind of pastry?

Or perhaps you had a specialty cake selection for birthdays and weddings, it was only 25% of your revenue, but boy it was profitable and it doesn’t require storefront.

You could close down the store, rent an hourly commercial kitchen and work with only specialty clients. You could eliminate 90% of expenses, labor, rent, etc. 

While you only make 25% of what you used to make, you will now be highly profitable, and with no headache of walk-in customers and managing workers, probably alot more happy.

I know that downsizing your business by 75% sounds counter intuitive, but something tells me with the right focus you can grow it back and potentially grow beyond anything you thought you could.

Now it’s time to ask yourself. What’s the worst thing that can happen?


Bankruptcy part:

Before we dig into the thick of it, BizBaby is not your legal counsyl and can’t offer you any legal advice. Consult with your lawyer before using any of the information in this or any other video on our channel.


  • The way that it usually works, bankruptcy proceedings will take any and all of your possessions, physical or intellectual, to repay your debt. There are some exceptions that allow you to keep some of those, for example, home, car and some money, it also differentiates state by state.


  • Your credit cards will be gone the day you have filed and you will have bankruptcy listed on your personal credit for 7 to 10 years.


  • After bankruptcy was filed, it puts a stay order on any court proceedings that you may be part of and once it’s discharged, it should be completely stopped. However, opposing side lawyers can request the stay order to be lifted for special exceptional reasons.


  • I suggest not declaring bankruptcy for a business, unless its a multimillion (like many many millions) dollar operation and it needs restructuring. Those tend to be very expensive, and time consuming, and lawyers end up being the only party that makes money in those. 

Filing the final tax return (mark it as final), closing bank accounts and closing doors for your business will do just fine. Company will remain in limbo under the weight of it’s own debt. You will keep getting calls from business creditors, but eventually they will stop too. 

As long as you pay all non-dischargeable debt (debt that can be placed against you as a business owner), such as employment taxes, unpaid wages, etc, usually LLC or C-corp structure separates business liabilities from shareholders/owners and directors.


  • On the personal level, debt that is non-dischargeable includes student loans, taxes, fines, penalties, etc. The rest can be discharged.


  • Personal bankruptcy takes about 3 months to be discharged once filed, if it’s uncontested.


  • You must file personal bankruptcy in the state where you have lived the most days out of the last 180 days. Or where you have the most assets that creditors will want to get access to. 

Creditors might request change of venue (state where it’s filed) based on your location or location of your assets, since they will need to hire legal help in the state of the filing, and it’s not cheap.


  • You will need to complete 2 courses that educate you on personal finances and how to manage your capital, as well as risks associated with filing for bankruptcy.


  • About a month after you have filed, there will be a hearing scheduled with the trustee. Trustee is a lawyer that works on the side of the government that will work on removing any assets you may have and using it to repay your debt. 

If you don’t have any assets, bankruptcy becomes “no-asset” chapter 7 filing, that means there is nothing to take from you since you have nothing of value, congrats if that’s the case, it’s the simplest and the most painless proceeding.


  • However, if your business is profitable or has valuable equipment or assets. Trustee can choose to sell it and repay creditors with it. Be prepared to lose control of your business and everything that comes with it. 

Technically once filed, your business doesn’t belong to you, until the trustee decides if it should be sold or just be left you.


  • There are other tricks that you might use when considering doing it and taking the most advantage from bankruptcy. Consider reaching out to us to evaluate your business situation.


Congratulations! If you have actually watched this video from beginning to the end, you should feel a little better now. There is always a way out and Bankruptcy can be a good thing, as you just have learned.