So how did we get to the point of having to decide if bankruptcy was the right thing to do? First you’ll need a little history. I call it the perfect storm of financial problems.
 I started a retail business in Feb. 2005 and all was going well. In January 2006, I had an opportunity to expand the store, doubling the size. (also doubling the rent… but got several months free rent, spaced out over the first year). In January 2007 I bought out one of my competitors, leaving me, and one other similar business in the area. But at the same time, rent went up considerably, too. Sales increased a considerable amount, store sales were going good… but because of this I was not able to focus on internet sales which are a lot less expensive to manage. So I wasn’t generating all the income I had wanted.
I had used a number of personal credit cards during this time, and was beginning to get business credit cards. I has transfering debt from the personal cards, to the business cards. But in a retail business you need inventory, so every time I would pay off or transfer away from a personal card, I ended up charging on the personal cards again… as I was having to use cash flow from the business to pay the high rent.
Near the end of 2007, I new I needed to consolidate my debt. Everyone said… no problem you should be able to get financing. I created a plan to get out of 1/2 of my building space, lowering rent, consolidate the debt and be able to move forward.
I spoke to the landlord, and made a verbal agreement, I would give back the space, they would rent it out and no more big rent to me. I gave back the space early May 2008, and was already behind on the rent. All other bills were up-to-date. But unfortunately they couldn’t rent it out… so big bills still to me. (Although I couldn’t pay it… so I started falling even farther behind)
Went to get financing in Mar/april 2008, and was turned down. Uh-oh. In June I hired a business consultant to create a business rescue plan, finance plan, etc. This was worthless, too.
My saving grace is that my busy months are coming up July – September and I should be able to get mostly caught up. Hopefully obtain financing and keep rolling along.
Well… It’s the end of July. My sales are down by 50% from last year, and 60% below my budget. This is a bad sign, so we are talking to lawyers about bankruptcy, or debt reduction.