The small business break-up
Sam and Diane had dreamed of being their own bosses, so they decided to put their life savings into a pizza shop. Diane worked full-time managing the business while Sam retained his position as an insurance salesman. Initially, the business was so profitable that, after only one year of operation, Sam was able to quit his job and join Diane at the pizza shop. Their dream had become a reality. Then, it became a nightmare.
Unfortunately, the area became flooded with pizza shops and Sam and Diane saw their profit margins evaporate. They could not compete with major pizza chains with more selections and cheaper prices.
In the process of their demise, Sam and Diane fell behind on their business rent payments and the landlord began threatening to lock them out. In addition, they owed money to several of their suppliers and, since they were now both working there full-time, they were no longer able to meet their household expenses, credit card payments, mortgage, car loans, and bills.
The choice was clear. Sam and Diane needed some help and, after seeing a Steidl and Steinberg billboard, called to ask some questions. They made an appointment to talk with a bankruptcy attorney and, together, formulated a game plan.
Sam and Diane closed their business and filed a Chapter 7 bankruptcy. By doing so, they eliminated their entire past due rent payments and were also able to break their lease with the landlord. If they had not filed for bankruptcy, the landlord could have held them responsible for all of the future monthly rental payments that became due, until the landlord was able to find another tenant to replace them.
Also, if the landlord had found another tenant who was going to pay less money per month, Sam and Diane would have been responsible for the difference between what the new tenant was paying and what they were obligated to pay. In addition, they were also able to eliminate other business obligations, the payments associated with the business plus all the monies due on their personal charge cards and loans. After relieving their financial stress, they were both able to find new employment, retain their home and keep their other major possessions.