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Businesses won’t find the problems that consumers do when trying to file for bankruptcy under the new law. Lawless warns that the problems will come after the business filing is done. “There are provisions that make it harder for businesses to get through Chapter 11 and there are expanded paperwork requirements,” he said.

“Small businesses will have to keep records that they wouldn’t normally have to keep.” It is with small businesses that the line is blurred, Lawless said. His research found that one in seven consumer filers will have a business reason. Often, this is because they are required to guarantee their business loan to creditors. Under the new law, the timetable for a reorganization plan is 210 days, while under the old law, “you could continue to get stays indefinitely if you could show you were making progress,” attorney Carlyon explained.

While critics have said the strict new bankruptcy law could stifle the entrepreneurial spirit, Nevada Small Business Development Center Deputy State Director Michael Graham disagreed.

“It hurts everybody when somebody declares bankruptcy,” Graham insisted. “It is harder on small businesses, no doubt, because they have fewer people to spread the work out of collection. It used to be that people would declare Chapter 7 and walk away from it. The objective of the new law is that people don’t walk away from it and leave other people holding the bag.”