Racher,
You indicate that your business is a sole-proprietorship, so if I am correct in assuming that you did not incorporate or create a limited liability company, the debts of the business are treated as your personal debt. This seems to be the case, given that the debt is now carried on a line of credit (presumably on your home) and on personal credit cards. So you cannot declare bankruptcy for the business only, in an attempt to protect other non-business assets that you may have.
You say the debt is divided between a low interest credit line and credit cards. Is the credit line max'ed out? If not, you could draw more on the line and use it to pay off or down the credit cards. At very least, focus your efforts on eliminating the credit card debt first, paying, if need be, the minimum on the credit line and as much as possible on the cards. You can certainly ask the bank to consider a lower rate on the cards, and if, as you say, you have a good credit rating, they may consider it. (Always worth a try.) Otherwise, if you are simply unable to address the credit card debt and the bank will not negotiate, I strongly suggest you go to www.nfcc.com to ask for a referral to a certified credit counselor in a location near you. This counselor can help you set up a payment plan for eliminating this debt. This should be your first step before even considering bankruptcy, which will dog you for many years and cost you a lot in higher interest rates, if you need to borrow money again in the future (assuming you can even get a loan). From the facts you shared in your question, it does not sound like you are candidate for bankruptcy in the first place.

by:  Eleanor Blayney | February 01 2010
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