HELP: Filing Chapter 13 bankruptcy and starting Indy agency?

[Bob Miller]

I fell on some tough times (wife lost her job for medical reasons, incurred a ton of medical debt and racked up the credit cards to cover her lost wages while she couldn't work for 1 year). My wife recently just got another job and is doing good health wise.

I am already an indy agent and have lots of relationships with carrier reps. The agency owner is fine if I go out and start an agency from scratch (I just can't take my book or anything for 2 years etc) But with mutual respect, I probably wouldn't ever go after my book. I was wondering if anyone has filed a chapter 13 bankruptcy and was able to start a scratch Indy P&C agency? Like I said its for medical reasons and I have build a good relationship with the reps. But I am not sure if the companies themselves would not accept me or anything? I'm looking to get on with Safeco, Travelers, Metlife, Progressive Platinum Auto & Home, Allied, and a few regional homeowner carriers to start with for a few years and build up the book.

I already have a solid marketing & business plan and I'm ready to take action, but I don't want to "shoot me in the foot" and leave my agency and start scratch and not be able to get the appointments etc. Please let me know if you've had any experiences yourself, or anyone you know.

Thank you

 

[Heather]

I think it could be an issue. Every contracting application I have ever completed for my agency said something along the lines of, "has any agency principle ever filed for bankruptcy, has judgments, liens, or back alimony or child support"

Personally I would reach out to the marketing reps of those companies and explain your situation, see what they say.

I had a csr who had filed bankruptcy, I had trouble getting her appointed with some companies. One company made an exception because she submitted a lengthy appeal letter outlining what went wrong and how she resolved it.

 

[VolAgent]

So it sounds like you have a good relationship with the current agency owner and the reps? And the current owner is ok with you leaving as long as you don't poach from the book?

Assuming all that, I highly recommend you sit down with each carrier rep with the current owner present and lay it all out. You want to start your own agency. You have your own business plan and will leave the current agency's clients alone. Based upon your financial history, would you be appointable, would they give you one?

Another thought, maybe talk to the agency owner and see if you can trade in some sweat equity for ownership. What is the owner's perpetuation plan? If there isn't one, become it, just make sure to get it all in writing. Then you aren't starting from scratch, just giving up some commission now for a seat at the ownership table. But again, get it in writing and make sure you get a buy out equal to your sweat equity if the owner sells.

 

[Markthebroker]

There is a bigger issue here that no one has talked about. I'm going to lay it out directly, so I'm sorry if offends you or hurts your feelings.

Something bad happened that you were not prepared for, and you failed to meet your financial obligations, and instead of working several jobs and making it work (like I did when it happened to me) you filed bankruptcy. Not trying to beat you up, but that's what happened, black and white. I wasn't even supposed to live past 25, with my health issues. I have fallen on times tougher than most people can imagine, and through planning and sacrifices have never failed any of my financial obligations. I've started several businesses, had health problems, had my home drop to half it's value, car crashes, you name it. I've never missed any bills. Never, never, never. The whole purpose of insurance is preparing in case something bad happens.

The reason the carriers may not work with you, is because your history shows that you had something happen you weren't prepared for, and failed to meet your financial obligations. Again, not to be mean, but I wouldn't work with you either. I turn tenants away all the time if their credit isn't perfect because I know if they failed their financial obligations in the past (whatever they were) then it is likely to happen again.

What backup plans do you have if this doesn't work? How will you provide for your family? How many years of income do you have set aside? How will you raise the money? As you know it takes a long time to become profitable with P&C, and most people fail.