sole proprietor gone bad... real bad.

[TooDepressed]

What is the name of your state (only U.S. law)? California

First, thanks for a great forum... a lot of good information.

I opened a music store about 10 years ago in California. I was young and didn't know what i was doing too much and opened it as a sole proprietor. The store was super successful and even considered opening additional locations. Fortunately i didn't. Years passed and the internet was growing super fast which meant music was easier to obtain...music stores started closing everywhere. I was fairly young and stubborn and I refused to downsize. I never saw the signs of my own failing business model. After 8 years i finally realized i had to close the store.... I had charged up all my personal credit cards and spent all my savings trying to stay open.... but i eventually gave in.

During the retail years i built a rather successful online store. When i closed the retail store I got an office where I focused on the website. Getting rid of the overhead of a large retail store as well as 6 employees saved me some money and i thought i would eventually get my footing. Sadly, the internet got harder to compete with. Between box stores, Amazon, Itunes, illegal downloading of music i just couldn't compete. I went from sales of a million dollars a year to barely $100,000 a year. I eventually had to close the office and now work out of my apartment.

The sad thing is i am now carrying a lot of debt i incurred as the business was failing. Between my own credit cards all at the max, a line of credit, vendor accounts i owe money on and minimal sales, I now realize i will never get caught up. I just don't have the sales i use to have in order to pay these debts. I am guessing i have about $100,000 in business debt. Which when making over a million dollars a year would have been manageable....but not anymore. I literally went from not much of a care in the world 3 or 4 years ago to not being able to pay rent or food for that matter... it has been very humbling. I have not made a payment on a credit card in 4 months. They all want these crazy amounts from me now. I used to make $1,000 payments on these cards just a few years ago but now can't even afford a $200 payment. They are all threatening legal action. I get about 20 phone calls a day from various creditors... i stopped answering my phone.

I have nothing to fall back on... I am making just enough to cover my rent... but if i lose this business, i will not be able too even do that and don't really have anywhere to go. I have no college education and no experience in anything other than my own business..

to further complicate things, i had a tax audit this year on my 2006 return. Due to a whole other issue i won't go into, the IRS told me i owed $181,000 in back taxes. I literally laughed at at this. How in the world am i ever going to pay ANY of this? And i doomed the rest of my life?

I have been in a very dark place the last 6 months. Separating myself from friends and family because i feel like such a failure. I know i'm not, and it's just the business model doesn't work anymore, but i should have seen that and planned accordingly. I feel like my life is worthless at this point and don't know where to turn. I will never get out of this. The hole i am in seems to get deeper and deeper. Suicide sometimes seems like my only option and i have played it out in my head a million times. It feels like my only escape from this. Filing bankruptcy will end this whole chapter of my file... but will i really have to give up my entire business? I really love what i am doing and feel without all the debt, i could actually make a comfy living doing this on my own on a much smaller scale. But i fear that is not an option. I rent an apartment, my car is falling apart, i do not own anything, have little in the bank and the inventory i have (though a lot) is older music and outdated. the retail price of this inventory is well over $100,000... but if i sold it to a liquidator of some sort, i'd probably get $1,000 for it if i were lucky.

Can anyone give me a few words of optimism to live for... you could save someone's life.What is the name of your state (only U.S. law)?

[bigun]

While the assets of your business will be considered property of the bk estate, your trustee will likely abandon any interest since the value is so low.
Nothing says you can't continue to operate your business post bk.
Most bk lawyers gve free or lowcost initial consultations. SPeak with a few and get all of your options explained.
Hell, this is just money. It's not worth your life or anybody's life.