The Bankruptcy Law Clinic Blog

Monday, June 3, 2013

How Can Chapter 13 Bankruptcy Help You Save Your Business?


America was built on the small business owner.  Like everyone else, they may be facing difficult economic times.  Are you one of these people?  Are you earning 50% of what you made a few years ago, causing you to fall behind on both your personal and business obligations? Do you want to keep the business open?   This is where a Chapter 13 personal bankruptcy could be used to save the business and protect it from creditors until profits can be seen. 

You will likely be able to save your business through Chapter 13 bankruptcy if:

1.       You can show that you have income that is “sufficiently stable and regular to enable [the] individual to make payments under a plan under chapter 13” (Section 101(30) of the Bankruptcy Code.)

2.       You can show that you (or you and your spouse) have less than $360,475 in unsecured debts (which means debts with no collateral) and less than $1,081,400 in secured debt (which means debts with collateral). 

3.       Your company is an individual (or sole) proprietorship.  If it is a corporation, limited liability company (LLC) or business partnership, there are other rules related to filing that go beyond the rules for a personal bankruptcy. 

Filing Chapter 13 bankruptcy will help you stay on your feet with your sole proprietorship business, and you will be able to use the filing to deal with your personal and business debts in one shot.  This means that creditors who are harassing you, whether for personal debts or business debts, will be placed under an “automatic stay,” meaning they can’t make any effort to collect against your personal or business assets.  You will be able to keep the important assets needed for your business to run properly without worrying that these will be taken from you through a judgment or lien.

Chapter 13 is an effective way of helping you keep your business if you are facing financial difficulties.  Talking with a bankruptcy attorney is the first step to helping you get back on your feet and keeping your business running as it should. 

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