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.
"We set out to ask, Are these a distinct subgroup of people filing? And we found that they are," says Lawless. People driven to personal bankruptcy because of business failure are likely to have more assets, income, expenses and debt. They were also proportionally more in debt--although their incomes were higher--than people who simply had jobs. When business owners go under, they go under harder.

The researchers calculated how long it would take for survey respondents to get completely out of debt if they devoted all their income--every penny--to paying off what they owed. For business owners, that would take a median of 3.8 years. For nonbusiness owners, the median payoff duration is 2.9 years.