3 ms·

Sure, but the business owner probably also lost his/her house in the process. Just because it's not permanent, doesn't mean bankruptcy is an easy option.

• toomuchtodo 6y ago
  During bankruptcy, all of your property will be placed in a bankruptcy estate. If you want to keep your home, you can usually exempt it from the estate and will continue to be liable for the mortgage as long as you make payments. If you don’t have enough equity in the property to secure junior liens on the property, such as a home equity loan, those will be stripped away and you’ll only be liable moving forward for the senior lien (primary mortgage). There’s a lot of nuance, and it’s hard to generalize, but the system is designed to provide some relief in a reasonable manner.
  • nmfisher 6y ago
    I don't know what it's like in the USA, but Australian banks simply don't lend to small businesses without taking security over (usually) real estate. This inevitably means a senior mortgage over the principal's primary residence. That being said, Australian banks are notoriously tight-fisted for any non-property investment, so perhaps things are more amenable in the USA.
    • toomuchtodo 6y ago
      US credit flows like water, despite our generous bankruptcy laws.