When Should a Small Business File for Bankruptcy During the Pandemic?
By Hope Dean
As COVID-19 cases skyrocket, businesses’ coffers are plummeting.
More than six million people have filed for unemployment. Big-name industries like petroleum miners and internet providers are filing for bankruptcy. And while small businesses are being offered special loans and deals, it still may not be enough.
That’s why we talked to debt expert Steve Rhode about whether you should file for bankruptcy as a small business owner during the pandemic.
So should you file? Here are three tips.
Rhode would know about bankruptcy — he went bankrupt himself in 1990.
Now a financial journalist and self-proclaimed “Get Out of Debt Guy,” Rhode used to run a real estate company called the Great Virginia Land Company with three employees. But after the economy dipped in 1989, he wound up filing for bankruptcy and accruing more than $26,000 in credit card debt.
When Rhode got out of debt, he vowed to help others do the same. Here are three tips he has for small business owners considering bankruptcy during the pandemic.
1. Take a breather
The first thing to do, according to Rhode, is to make sure you don’t lose your mind.
“Debt is nothing more than a math problem wrapped in emotion,” he said. “Right now, a lot of [small business owners] are panicking.”
Small businesses are disadvantaged when it comes to this pandemic, Rhode told Debt.com. Many are paying bills month-to-month and don’t have enough money in the bank to tide them over as bigger companies do.
But that doesn’t mean you should make a rash decision.
“[Small businesses] may jump right now to think about filing bankruptcy. However, the best answer is: don’t,” Rhode said. “This is just the beginning of a crisis. If you rush and file bankruptcy now and wrap things up, it doesn’t mean that more surprises or liabilities might not come behind that.”
So for now, take a “brain break.” Take all your mail and put it in a box to be dealt with within a few days. Don’t run to your creditors just…
