It’s tough times in this economy, especially for the small business owner. Job losses , bankruptcies and the collapsing credit markets are having a ripple effect on small businesses and entrepreneurs. Many small businesses are finding it difficult to get credit, find clients and collect on outstanding invoices.
All of these variables combined are creating a serious financial crisis for small businesses, driving many to bankruptcy and others to close down completely. But one of the horrible effects of small businesses failing is the inability of some to finish outstanding projects where money has already been received creating business debts that are often impossible to repay.
Many small business owners are sued by former clients and are forced to file bankruptcy in an effort to protect their assets and future income from wage garnishment . But if proper records are not maintained by the small business, the bankruptcy case may be dismissed.
In the case of In re Keefe, 2007 WL 4544247, a small business owner destroyed records pertaining to former clients, including a client that gave him a $100,000 advance for work he never completed. In anticipation of a lawsuit from the client, the small business owner filed bankruptcy; but his case was dismissed because he did not maintain proper records.
Don’t allow your bankruptcy case to be dismissed because you failed to maintain proper business records. If you are a small business owner who has had to abandon projects due to the economy and owe former clients money, speak with a bankruptcy attorney today to find out what actions you can take to possibly discharge or repay these debts in bankruptcy.