Case Study: Jackie’s Clothing Store – Overcoming Personal Debt After Business Closure
The Situation:
Jackie owned a small clothing store in a small town that was forced to close in 2017 due to a lack of sales. She was left with significant debt to suppliers and the ATO.
The Challenges:
- Substantial debt to suppliers and the ATO
- Personal liability due to operating as a sole trader
- Living on minimum wage with two children
- Fear of public knowledge about her financial situation
LemonAide’s Approach:
- Assessed Jackie’s financial position and income
- Calculated the time it would take to pay off debts
- Explored bankruptcy as a potential solution
- Guided Jackie through the bankruptcy process
The Outcome:
- Jackie entered bankruptcy to deal with all debts
- Avoided income contributions to the bankrupt estate due to her income level
- Received support to remain compliant with bankruptcy obligations
- Was discharged from bankruptcy on time (in 3 years + 1 day)
Key Takeaways:
- Operating as a sole trader can lead to personal liability for business debts
- If Jackie owned a property solely that possessed equity, the property may have been sold to discharge the liabilities of the business.
- Bankruptcy can be a viable option when debts are insurmountable
- Professional guidance can help navigate the bankruptcy process
- Compliance with bankruptcy obligations is crucial for timely discharge
Struggling with personal debt after business closure?
