If you own a business and your company and/or personal debts are no longer manageable, you may be wondering whether filing for Chapter 13 bankruptcy is a viable, strategic option. Chapter 13 bankruptcy is available only to individuals, not businesses. However, if you are a sole proprietor or have personal liability for your business debts, you may be eligible to file for Chapter 13 in order to have both your business and your personal debts addressed effectively over time.
With that said, if your business is structured as a corporation, partnership or LLC, filing for Chapter 13 as an individual is not likely to directly address your business’s liabilities. As a result, you may need to consider other forms of bankruptcy, such as Chapter 11, if your business-related debts are your primary concern.
If you move forward with filing for Chapter 13 bankruptcy
Under Chapter 13, you will be required to submit a repayment plan to the court, outlining how you intend to pay down your debts over the next three to five years. As a business owner, it is going to be important to do what you can to ensure that your income stream can support both the operation of your business and the repayment plan. Working with a skilled legal team will allow you to construct an informed plan that is likely to be manageable and sustainable over time.
Filing for Chapter 13 bankruptcy as a business owner can be a viable way to regain control of personal and business finances. However, it’s a long process that should not be approached lightly. By thoroughly researching your options – in addition to the process itself – you can make informed decisions about how best to move forward.