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How Selling LuLaRoe Lead to Personal Bankruptcies for Some Women

Dec,08,2017

By:Mike Cibik

 


How Selling LuLaRoe Lead to Personal Bankruptcies for Some Women

 

Most working women want a job where they can stay at home and make money. There are many ways to do this, such as selling Tupperware, Pampered Chef and Avon. These companies empower women to sell these products at their own pace from the comfort of their home or go to their clients’ homes – to be their own boss. While many can make a great living at selling products that have their own form of advertising (e.g. Avon parties), there are some that can be misleading. There is one company in particular that caused too many women to declare bankruptcy. That company is LuLaRoe.

 

LuLaRoe is a clothing company that recruits women to sell LuLaRoe merchandise from their homes. Prior to 2015, women who sold LuLaRoe apparel were making great profits. However, the profits began to drop in 2015. The reason: competition. There were now other apparel companies that were selling similar clothing that flooded the market. The women who sold LuLaRoe were told that they had to keep at least $20,000 worth of merchandise at home. The company rewarded those who bought the most inventory. When LuLaRoe sales began to dwindle and eventually stop, many women had used their credit cards to buy the mandatory amount of merchandise (onboarding packages) that cost upwards of $9,000. And for many, selling LuLaRoe was their sole source of income. Some did the business under their own names (social security numbers), while others listed themselves as a LuLaRoe business alias. Another issue was the return policy. Corporate had changed the return policy a number of times and added stipulations, making it almost impossible for a seller to recoup her losses.

 

Chapter 7 & 13 LuLaRoe Bankruptcies

 

Many women wanted to end their relationship with LuLaRoe. If they spoke out against the company, they were punished by not having their orders honored or experienced delays. Also, it turned out that the women did not have as much control over their “business” as they thought they would. For example, they could only sell in “approved” places. Many were forced to declare Chapter 7 or Chapter 13 bankruptcy because they could not afford to keep the merchandise and were spending more money to maintain their business. The majority of bankruptcies were Chapter 7. A Chapter 7 bankruptcy is when the debtor files for bankruptcy to wipe out his or her debts to financially start over. The person (or couple) make below the median income and do not have the money to pay their debts. It’s important to know which of your assets are exempt and non-exempt; this will let you know how much of your assets you get to keep. There were some who declared a Chapter 13 bankruptcy, where they (couples) could pay off their debts over time. They made above the median income and were forced into the Chapter 13. They agreed to a payment plan set up by the IRS. The payment plan lasts three to five years.

 

In addition to the bankruptcies, some have gone as far as to call LuLaRoe a pyramid scheme, where there was pressure put on sellers to buy more merchandise and recruit other sellers. In October, two class-action lawsuits were filed against LuLaRoe. And there is the emotional and physical toll. Many of the LuLaRoe sellers experienced stress-related illnesses because of the pressure to make the business work and in trying to get their refunds. Consultants were often mentors to new sellers. They promoted the “power of positivity,” which made sellers feel as though they were failures if they didn’t sell enough merchandise.

 

When You Need Bankruptcy Help

 

If you are faced with a similar situation, the attorneys at Cibik & Cataldo can help you get back on your feet. There are other reasons for declaring bankruptcy, such as a car accident, illness or divorce. We have helped tens of thousands of clients for nearly 40 years. We understand what you are going through and will provide the expertise you need to file the right bankruptcy for you. We will walk you through each step and explain the legal terminology, so you know exactly what to expect. Don’t let your financial problems turn into health problems, as with LuLaRoe.

 

We want to help you. Contact us today at (215) 735-1060 for a free consultation. The purpose of the consultation is to see if you do have a case for bankruptcy. If you do have a case, we will get to work for you right away. We will sit down and go over the documents we will need, such as tax returns and pay stubs. We will go over the bankruptcy process from our first meeting to the bankruptcy discharge. Once the bankruptcy has been discharged, we will also recommend tools for building your credit score and buying a home or car. Call or email us today!

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