Can You Start a Business After Filing for Bankruptcy?

One of the most devastating financial situations anyone can find themselves in is filing for bankruptcy. It can take a significant toll on your finances and personal life, making it difficult to get back on your feet.

However, what if you want to start a business after filing for bankruptcy? The good news is that it is possible! Below, we will explore whether it is possible to start a business following bankruptcy and provide some tips on how to run a successful business after filing for bankruptcy.

If you are thinking about starting a business after filing for bankruptcy, you might want to consult with an attorney first. The Bay Area bankruptcy attorney at the Law Offices of Melanie Tavare can explain the nuances of starting a business if you filed for bankruptcy.

Can You Start a Business After Filing for Bankruptcy?

The short answer is yes, you can start a business after filing for bankruptcy. Millions of Americans choose to file for bankruptcy to get relief from debt every year. According to the American Bankruptcy Institute, the number of bankruptcy filings in February 2023 increased by 18% compared to February 2022.

Contrary to popular belief, bankruptcy does not prevent you from starting a business, but it may limit the types of businesses you can run. For example, it might make it challenging to obtain credit, which we will discuss in the next section.

Can You Obtain Credit for Your New Business?

One of the most significant challenges business owners face after filing for bankruptcy is obtaining credit. It is crucial to rebuild your credit history and credit score, as many banks and lenders may be hesitant to lend money to someone who has filed for bankruptcy. However, alternative options, such as peer-to-peer lenders and credit unions, might be more sympathetic to your situation and more likely to lend you money for your new business.

Five Tips on How to Operate a Business After Filing for Bankruptcy

If you have started a business after filing for bankruptcy, here are five tips to help make it a success:

• Focus on cash flow. Make sure your business generates enough cash to keep the business afloat and pay your bills. A profitable business is good, but if it does not generate enough cash, it will not survive.
• Leverage your network. Your network of friends, family, and colleagues may want to help support your new business. Take advantage of any assistance they offer you.
• Keep your overhead low. Try to minimize your overhead expenses as much as possible. This might mean running your business from home or finding a cost-efficient workspace.
• Embrace digital marketing. Digital marketing is an affordable way to promote your business on social media or through online ads.
• Learn from your mistakes. Starting a business after bankruptcy is challenging, and you will make mistakes along the way. Embrace those mistakes and treat them as learning opportunities.

You may need to get the assistance of an attorney to help you understand more about the nuances of starting and operating a business after filing for bankruptcy.

Discuss the Bankruptcy’s Impact on Your Business with an Attorney

Starting a business after filing for bankruptcy is challenging, but it is possible. With the right mindset and approach, you can overcome the various obstacles that might come your way. If you are looking to start a business to achieve financial stability after filing for bankruptcy, you might want to speak with an attorney first. Our compassionate bankruptcy attorney at the Law Offices of Melanie Tavare can explain everything you need to know about bankruptcy and its potential impact on your business. Get a free case evaluation by calling 510-255-4646.