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Down and Out

Many personal bankruptcies are really business failures in disguise.

This story appears in the July 2004 issue of Entrepreneur. Subscribe »

How many personal bankruptcies are actually small-business bankruptcies in disguise? Between 13 and 14 percent, it turns out.

Two law professors asked about small-business ownership as part of the Consumer Bankruptcy Project, an in-depth study of 2,000 households that declared bankruptcy. Project co-directors Robert Lawless, a University of Nevada, Las Vegas, law professor, and Elizabeth Warren, a Harvard Law School professor and co-author of The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke, specifically designed a section of the study to get at the long-suspected connection. Lawless and Warren agreed to give Entrepreneur a first glance at their findings.

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