Bankruptcy can be a challenging and testing time for many people that go through the process. It can test everything from your patience to strength, but many people believe it has made them stronger on the other end. The fact of the matter is that bankruptcy is not the end of the road. In fact, many people would argue it is the beginning to a hopeful future filled with promise and success.
There is a common myth that people who have been through bankruptcy are not able to start a business in the future, but this is simply not true. If you are looking to start a business after going through bankruptcy, know that it is possible. But while it is feasible and practical, it is important to understand and prepare for the obstacles and challenges you will face.
Be Realistic About Your Situation
The biggest piece of advice would be to stay realistic. It is almost guaranteed that you will face problems when looking for credit and financing. The best thing to do is to think about it from the other side. If you were the lender, what would make you willing to give credit to someone who has a history of bankruptcy? If you can put yourself in this mindset, you are much more likely to be able to convince a lender that you are able to run a profitable and successful business.
Some practical things you could do to improve your chances of receiving credit from a lender could be finding private investors to fund some of the venture, developing a detailed business plan, and partnering up with people who have a history of good credit. All of these things show a lender that you are set up for success.
Separate Yourself From Your Business
In order to take your idea and turn it into a functioning business, it will be important for you to separate yourself from the business and your history of bankruptcy. If you were a sole proprietor or partner, it is quite possible that you were forced to file for bankruptcy because of business debts you incurred. In the future, it could be a good idea to set up a corporation or limited liability company (LLC) to separate your personal responsibility from the business.
A second thing to note is that you will need to apply for and obtain a new tax identification number in order to setup your new business (That is, if your previous business was a sole proprietorship and was liquidated under a personal chapter 7 bankruptcy).
Be Smart and Have a Plan
There is much more to starting a new business after bankruptcy, but remember these two things: have a realistic plan and separate yourself from your past. If you can learn how to do these things, you stand a much better chance at starting that new business you are looking to get off the ground.