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Sole Proprietor Gone Bad

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  • Sole Proprietor Gone Bad

    First, thanks for a great forum... a lot of good information.

    I opened a music store about 10 years ago in California. I was young and didn't know what i was doing too much and opened it as a sole proprietor. The store was super successful and even considered opening additional locations. Fortunately i didn't. Years passed and the internet was growing super fast which meant music was easier to obtain...music stores started closing everywhere. I was fairly young and stubborn and I refused to downsize. I never saw the signs of my own failing business model. After 8 years i finally realized i had to close the store.... I had charged up all my personal credit cards and spent all my savings trying to stay open.... but i eventually gave in.

    During the retail years i built a rather successful online store. When i closed the retail store I got an office where I focused on the website. Getting rid of the overhead of a large retail store as well as 6 employees saved me some money and i thought i would eventually get my footing. Sadly, the internet got harder to compete with. Between box stores, Amazon, Itunes, illegal downloading of music i just couldn't compete. I went from sales of a million dollars a year to barely $100,000 a year. I eventually had to close the office and now work out of my apartment.

    The sad thing is i am now carrying a lot of debt i incurred as the business was failing. Between my own credit cards all at the max, a line of credit, vendor accounts i owe money on and minimal sales, I now realize i will never get caught up. I just don't have the sales i use to have in order to pay these debts. I am guessing i have about $100,000 in business debt. Which when making over a million dollars a year would have been manageable....but not anymore. I literally went from not much of a care in the world 3 or 4 years ago to not being able to pay rent or food for that matter... it has been very humbling. I have not made a payment on a credit card in 4 months. They all want these crazy amounts from me now. I used to make $1,000 payments on these cards just a few years ago but now can't even afford a $200 payment. They are all threatening legal action. I get about 20 phone calls a day from various creditors... i stopped answering my phone.

    I have nothing to fall back on... I am making just enough to cover my rent... but if i lose this business, i will not be able too even do that and don't really have anywhere to go. I have no college education and no experience in anything other than my own business..

    to further complicate things, i had a tax audit this year on my 2006 return. Due to a whole other issue i won't go into, the IRS told me i owed $181,000 in back taxes. I literally laughed at at this. How in the world am i ever going to pay ANY of this? And i doomed the rest of my life?

    I have been in a very dark place the last 6 months. Separating myself from friends and family because i feel like such a failure. I know i'm not, and it's just the business model doesn't work anymore, but i should have seen that and planned accordingly. I feel like my life is worthless at this point and don't know where to turn. I will never get out of this. The hole i am in seems to get deeper and deeper. Suicide sometimes seems like my only option and i have played it out in my head a million times. It feels like my only escape from this. Filing bankruptcy will end this whole chapter of my file... but will i really have to give up my entire business? I really love what i am doing and feel without all the debt, i could actually make a comfy living doing this on my own on a much smaller scale. But i fear that is not an option.

    Can anyone give me a few words of optimism to live for... you could save someone's life.

    TooDepressed

  • #2
    Originally posted by TooDepressed View Post
    I have been in a very dark place the last 6 months. Separating myself from friends and family because i feel like such a failure. I know i'm not, and it's just the business model doesn't work anymore, but i should have seen that and planned accordingly. I feel like my life is worthless at this point and don't know where to turn. I will never get out of this. The hole i am in seems to get deeper and deeper. Suicide sometimes seems like my only option and i have played it out in my head a million times. It feels like my only escape from this. Filing bankruptcy will end this whole chapter of my file... but will i really have to give up my entire business? I really love what i am doing and feel without all the debt, i could actually make a comfy living doing this on my own on a much smaller scale. But i fear that is not an option.

    Can anyone give me a few words of optimism to live for... you could save someone's life.

    TooDepressed
    First thing you need to do is to come out into the light. Get back with family and friends and let some of them know how bad things have become. You'll get a lot of support there.

    You may need medical help for the depression, you may need drugs, or just getting involved again with good people may solve depression problems.

    As to your business, let it go. You can always start another one. Get your problems cleared up now, and when you have them behind you, you can start fresh and with a clear head.

    What you've been doing hasn't worked, so why worry about keeping it going. Rule #1 about being in a hole is to quit digging!

    So, quit digging, get back together with your family, seek medical advice for your depression and remember.....

    It's only money. It's certainly not worth killing yourself over.

    Best of luck to you. You're among friends here.
    All information contained in this post is for informational and amusement purposes only.
    Bankruptcy is a process, not an event.......

    Comment


    • #3
      Since you have a talent for the business you are in, should this one fail, you can put your talents to good use creating a new business with what you know now.

      Connect with friends--I didn't let everyone know about the bk--but the ones that I did tell are very supportive. One even just shrugged her shoulders and said she knew lots of people who were doing that now.

      Yes, the situation is depressing and it seems perfectly normal that you have really dark thoughts, yet, don't go too far down that path. Do get some help-friends and family, or professional help. There are free clinics that can help if you can't afford private help.

      Know this, you will come out on the other end. It's hard to face up to all that's going on right now. Probably most of the people reading and writing on this board have experienced the deep unhappiness that you are going through .

      Move forward and keep posting with help you need about BK.
      Take Care!
      Filed Chapter 7 August 18,2009
      341 scheduled for Oct 7, 2009--DONE!
      Report of No Distribution Oct 8, 2009
      Discharged & Closed Dec. 14, 2009

      Comment


      • #4
        TooDepressed - We were pretty much in the same boat. Business failure after 23 years due to changes beyond our control. We tried to keep things going but just couldn't keep up. Finally, we decided to talk to a bankruptcy attorney. My suggestion? Don't try to figure this out yourself. Our consultation was free and put us on the road to financial recovery and gave us hope again. Also, talk to the attorney about the taxes and discuss your options. Things may not be as bad as they seem. Once you file, the phone calls stop. You will sleep better and be able to think more clearly.

        As Frogger said, turn to your friends and family. Let them offer you support. Also, see a doctor for your depression. You will feel so much better after you get help. Trust me, with the economy as it is today, doctors are dealing with this more and more these days. You're not alone in this.

        FYI, we included our sole proprietorship business debt in our bankruptcy. Our attorney said if we could show proof of business liability insurance to the Trustee, we could continue to operate our business throughout the bankruptcy. Don't assume you are going to lose your business. Talk to an attorney. Running your business may not be affected by the bankruptcy.

        And remember, you are not a failure. You are an entrepenuer. You have already proven you have a natural talent to create a successful business and you certainly can do it again! Sometimes a business just runs it's course. Technology changes, the economy changes, etc. Many successful people survive business failure after business failure. It's all part being an entrepenuer...being a risk taker. Remember, America was built on this entrpenueral spirit. Once you get your debt behind you, get help with your depression and reconnect with your family and friends, you will be ready to start again...like many successful businessmen before you.
        Filed Non-Consumer Chapter 7: 07/31/2009
        341 Hearing: 09/03/2009
        Last Day for Creditor's Objections: 11/02/2009
        Discharged! 11/03/2009 CLOSED! 01/05/2010

        Comment


        • #5
          This quote may come in handy,
          If at first you don't succeed, try again! You seemed to have done a pretty good job from the beginning. I think where you went wrong, is you didn't focus on the technology advancements. That's what people love. Don't give up. You can still be successful! Good luck to you and keep me posted on how things are going!
          (Active links removed by moderator--forum rules about advertising.)

          Comment


          • #6
            If your business has few or no assets, and is entirely dependent on your talent, you will almost certainly be able to continue to operate as usual.

            I had the same concern and was terrified about what might happen. I learned a lot and my attorney confirmed it. My business, in terms of value, is totally worthless without me.

            So that means, I exempt a couple computers and the worthless shares of stock, and continue as usual.

            Good luck, I have been in your place. There are brighter days ahead.

            Best wishes,

            -dmc
            11-20-09-- Filed Chapter 7
            12-23-09-- 341 Meeting-Early Christmas Gift?
            3-9-10--Discharged

            Comment

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