Bankruptcy Reform; The Effect on Small Businesses
According to a recent article in CFO.com, the new bankruptcy laws could have a huge impact on entrepreneurs. That study shows that a segment of people who filed for personal bankruptcy in reality were small business owners who used their personal credit to launch or sustain their businesses.
According to research conducted by professors at Harvard Law School and the University of Nevada, Las Vegas, and supported by the Ewing Marion Kauffman Foundation, the US government reported about 37,000 small businesses filing for bankruptcy in 2003. However, the research shows that as many as 20 percent of consumer bankruptcy filings may really be business bankruptcies, putting the small business bankruptcies at closer to 260,000 or 315,000.
The Kauffman Foundation, which supports entrepreneurial education, fears that the new law changes will discourage consumers from starting their own businesses for fear that a business failure could translate into personal ruin.
