Chapter 13 Bankruptcy
Chapter 13 bankruptcy is only an option for individuals and not businesses such as partnerships, corporations, or LLCs. Just like a Chapter 7 bankruptcy, if you are a sole proprietor, you have the option to file a personal Chapter 13 bankruptcy that will reorganize your personal and business debts. A skilled California small business bankruptcy lawyer can help you understand the similarities and differences between these two different types of bankruptcy options.
Small Business Owner Benefits of Chapter 13 Bankruptcy
Unlike Chapter 7 bankruptcy, in Chapter 13, you keep your assets. Instead of paying your creditors with assets sold by the trustee, you pay them back through a payment plan. Sometimes, you only pay back a portion of the debts. A sole proprietor with significant business assets will have unexempt assets sold by the Chapter 7 trustee. In Chapter 13, the debts are reorganized, allowing you to protect your business assets and continue running your business.
The trustee will use your monthly payments over three or five years to pay your creditors up to a certain amount. The main requirement is that you must pay the value of your nonexempt assets with your payment plan. Your California small business bankruptcy lawyer can help you determine how much this might be and if you will be on a three-year plan or a five-year plan.
If your business is a separate entity such as a partnership, corporation, or LLC, you can still reorganize and potentially eliminate your personal liability for business debts by filing under Chapter 13. You can also do things with a Chapter 13 that you can’t in Chapter 7. For instance:
- Get current on a house, car, equipment payment, or any loan in which property is used as collateral
- Pay your balances to priority creditors, for example, tax debt, student loans, and domestic support obligations
- Decrease certain loans to the value of the property, often referred to as a cram down
Contact a California Small Business Bankruptcy Lawyer Today
If it’s unlikely that the financial situation of your small family business will substantially improve soon on its own, the best thing you can do is to reach out to an experienced California small business bankruptcy attorney today. Your attorney will assess the financial status of your business and help determine the steps that will result in the most favorable outcome to your case. By taking this step, you are taking control of your situation and moving towards financial security.
Your California small business bankruptcy lawyer can explain more about your bankruptcy options, as well as their benefits and drawbacks in your individual personal or business situation.
Schedule your family business bankruptcy consultation by emailing This email address is being protected from spambots. You need JavaScript enabled to view it. or calling (408) 909-0125 today. We want to help you achieve a brighter financial future and find success in whatever you might aspire to do.