Small-business owners considering bankruptcy may be shocked to learn they could lose their homes

Though coronavirus lockdowns are beginning to ease, small businesses such as restaurants, laundromats, and florists will continue struggling with the devastating fallout from months of, at best, seriously curtailed revenue. While the PPP small-business loan program has kept some of those businesses nominally solvent in the short term, a wave of small-business bankruptcies is imminent once such support runs out.

But experts say many small business owners who consider bankruptcy will discover a devastating trap. The bankruptcy code in many states could force small-business owners to give up their homes to resolve business debts, potentially robbing them of the solid