When we hear about bankruptcy the conversation is usually focused on the debts owed and the lack of income to pay. But what about the success stories after the bankruptcy has ended and the debtors are well on the road to their fresh start? One such story is the journey of Linda and Vince McMahon who filed for bankruptcy over 30 years ago after a series of business failings, bad investments and unpaid debts. According to Linda McMahon, the bankruptcy filing gave them an opportunity to start over and the incentive to get smart about their finances. Taking advantage of the fresh start opportunity that bankruptcy offers, the McMahons were able to discharge their debts and eventually build a billion dollar wrestling business W.W.E. that is the envy of many. But would they have been able to build their wrestling empire without bankruptcy? Probably not.
- It is very difficult to build a business from scratch if you are struggling to repay large amounts of debts especially consumer debts. Unlike business debts, consumer debts do nothing to enhance your business. Bankruptcy discharges those consumer debts freeing up more money and energy for business people to take risks with their entrepreneurial ventures.
- Individuals who have large amount of debts simply cannot take the time out to start or run a business. Because a business can take several years to earn a profit, it requires a lot of unpaid work; those who are in debt can’t afford to make that investment, they must find a job and work to repay their debts. By filing bankruptcy and discharging unsecured debts entrepreneurs are better equipped to dedicate the necessary number of unpaid work hours into their business.
- It is very difficult to repay large amounts of debt in a reasonable amount of time. The McMahons allegedly had over $1 million in debt at the time of their bankruptcy filing. It’s not clear what their income was at the time of the bankruptcy filing; but it would have probably taken more than 5 years to repay that money. If they were spending that 5 years repaying debt instead of working on their next venture who knows how many opportunities they would have lost.