You have a great business idea, but you have too much debt to get it started right away. You decide that you’re going to file for bankruptcy, eliminate your debt and then start the company. How soon can you do it?
Technically, you can start that company immediately. Nothing about your bankruptcy filing bars you from business ventures.
However, as long as the bankruptcy is in process, you are not allowed to acquire unauthorized debt. You first have to go to the court and ask for approval. Odds are, if you need more than a few thousand dollars, the court is not going to give you that approval.
In that sense, you may realistically have to wait until the bankruptcy filing is complete to go out and get a loan for the new company. This can delay your plans significantly.
What happens if you ignore the bankruptcy court, decide not to get approval, and just take on the debt anyway? The court then has the option to dismiss your case. When this happens, your creditors can start trying to collect on that debt again. Your bank account could be garnished or they can use other measures to get their money back. This could be a financial disaster for you and may make it completely impossible to start a new company, so you definitely do not want to ignore the court.
Do you have any more questions about bankruptcy and how it is going to impact your future as a business owner or an individual? Make sure you fully understand all of your legal rights and how the process works.